Cost Behavior Patterns and Concepts

CopyofScenario_B.xls

Journal Entry

Eddison Electronic Company
Journal Entries 2005
		"000" Omitted
	Activity
1	Sales not on account	$29,440
2	Sales on account	28,060
3	Selling Expense	3,220
4	Administrative Expense	6,210
5	Supplies Factory	3,450
6	Insurance Factory	920
7	Indirect Labor	6,900
8	Factory Salaries	288
9	Factory Property Tax	173
10	Maintenance Expense Factory	2,001
11	Depreciation Expense Factory	3,726
12	Utilities Factory	828
13	Purchases of Raw Materials	17,250
14	Direct Labor Factory	3,450
15	Raw Material Inventory, January 1	2,070
16	Raw Material Inventory, December 31	1,380
17	Work in Process Inventory, January 1	4,140
18	Work in Process Inventory, December 31	2,300
19	Finished Goods Inventory, January 1	5,980
20	Finished Goods Inventory, December 31	4,830
21	Bad Debt Expense	276
22	Accounts Receivable, net	9,430
23	Prepaid Expenses	840
24	Land	2,760
25	Plant and Equipment	37,950
26	Cash 1/1/05	4,646
27	Accounts Payable	14,410
28	Interest Expense	28
29	Notes Payable, 10%	2,070
30	Bonds Payable 8%	8,510
31	Stockholders' Equity	31,510
32	Retained Earnings	6,670
33	Income tax rate	30%

Eddison Electronics Company
1.5GB Chip Project - USA
	Plan	Actual 2005	Difference
Investment in Equipment	$5,000,000	$5,000,000	$0
Income
Sales	$5,250,000	$6,000,000	$750,000
Variable Expenses	2,500,000	2,800,000	$300,000
Contribution Margin	$2,750,000	$3,200,000	$450,000
Less Fixed Expenses:
Costs	900,000	950,000	$50,000
Depreciation	500,000	500,000	$0
Net Operating Income	$1,350,000	$1,750,000	$400,000
Cash Flow
Sales	$5,250,000	$6,000,000	$750,000
Less Variable Expenses	2,500,000	2,800,000	300,000
Contribution Margin	2,750,000	3,200,000	450,000
Less Costs	900,000	950,000	$50,000
Net Annual Cash Inflow	$1,850,000	$2,250,000	$400,000