Accounts Assignment

Question 1: Chapter 10 Managerial Accounting (30 mins) Prepare a cost of goods manufactured schedule, a partial income statement, and a partial balance sheet. The following data were taken from the records of Clarkson Company for the fiscal year ended June 30, 2017.

Raw Material

Factory Insurance $ 4,600 Inventory 7/1/16 $ 48,000 Factory Machinery

Raw Material

Depreciation 16,000 Inventory 6/30/17 39,600 Factory Utilities 27,600 Finished Goods

Office Utilities Expense 8,650

Inventory 7/1/16 96,000 Sales Revenue 534,000 Finished Goods

Sales Discounts 4,200

Inventory 6/30/17 75,900 Plant Manager’s Salary 58,000 Work in Process

Factory Property Taxes 9,600

Inventory 7/1/16 19,800 Factory Repairs 1,400 Work in Process

Raw Material Purchases 96,400

Inventory 6/30/17 18,600 Cash 32,000 Direct Labor 139,250

Indirect Labor 24,460

Accounts Receivable 27,000

Instructions (a) Prepare a cost of goods manufactured schedule. (Assume all raw materials used were direct materials.) (b) Prepare an income statement through gross profit. (c) Prepare the current assets section of the balance sheet at June 30, 2017.

Question 2: Chapter 11 Cost-Volume-Profit (20 mins) Compute break-even point and margin of safety ratio, and prepare a CVP income statement before and after changes in business environment. Mary Willis is the advertising manager for Bargain Shoe Store. She is currently working on a major promotional campaign. Her ideas include the installation of a new lighting system and increased display space that will add $24,000 in fixed costs to the $270,000 currently spent. In addition, Mary is proposing that a 5% price decrease ($40 to $38) will produce a 20% increase in sales volume (20,000 to 24,000). Variable costs will remain at $24 per pair of shoes. Management is impressed with Mary’s ideas but concerned about the effects that these changes will have on the break-even point and the margin of safety. Instructions (a) Compute the current break-even point in units, and compare it to the break-even point in units if Mary’s ideas are used. (b) Compute the margin of safety ratio for current operations and after Mary’s changes are introduced. (Round to nearest full percent.) (c) Prepare a CVP income statement for current operations and after Mary’s changes are introduced. (Show column for total amounts only.) Would you make the changes suggested?

Question 3: Chapter 12 Incremental Analysis (40 mins) Prepare incremental analysis concerning elimination of divisions. Brislin Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $213,000 and the following divisional results.

Division I II III IV

Sales $250,000) $200,000 $500,000 $450,000 Cost of goods sold 200,000) 192,000) 300,000 250,000 Selling and administrative expenses $.175,000) 60,000) 60,000 50,000 Income (loss) from operations $ (25,000) $ (52,000) $140,000 $150,000

Analysis reveals the following percentages of variable costs in each division.

I II III IV Cost of goods sold 70% 90% 80% 75% Selling and administrative expenses 40 60 50 60

Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued. Instructions (a) Compute the contribution margin for Divisions I and II. (b) Prepare an incremental analysis concerning the possible discontinuance of (1) Division I and (2) Division II. What course of action do you recommend for each division? (c) Prepare a columnar condensed income statement for Brislin Company, assuming Division II is eliminated. (Use the CVP format.) Division II's unavoidable fixed costs are allocated equally to the continuing divisions. (d) Reconcile the total income from operations ($213,000) with the total income from operations without Division II.