Question
1. The following information is from Bluff Run Golf Courses. The company runs three courses and the July income statement for each course is as
1. The following information is from Bluff Run Golf Courses. The company runs three courses and the July income statement for each course is as follows:
A. Find the missing value for outings revenue, wages, and operating income.
| BLUFF RUN GOLF COURSES | ||||||
| Income Statement | ||||||
| Month Ending July 31, 2018 | ||||||
| Blue Course | Black Course | Gold Course | ||||
| Greens fees revenue | $62,500 | $89,000 | $42,700 | |||
| Outings revenue | ___ | 6,000 | 27,000 | |||
| Total revenue | $74,200 | $95,000 | $69,700 | |||
| Expenses: | ||||||
| Landscaping | $7,800 | $14,200 | $6,400 | |||
| Wages | 43,900 | ___ | 32,500 | |||
| Repairs and maintenance | 5,600 | 2,600 | 4,400 | |||
| Fuel | 3,100 | 3,000 | 1,990 | |||
| Utilities | 1,800 | 3,000 | 1,650 | |||
| Total expenses | $62,200 | $78,300 | $46,940 | |||
| Operating income | $12,000 | $16,700 | $___ | |||
B. Rank the courses in order of profitability, using dollars.
Gold Course is highest, Black Course next, Blue Course least.
Blue Course is highest, Black Course next, Gold Course least.
Black Course is highest, Gold Course next, Blue Course least.
Black Course is highest, Blue Course next, Gold Course least.
C. Rank the courses in order of profitability, using percentages.
Gold Course is highest, Black Course next, Blue Course least.
Blue Course is highest, Black Course next, Gold Course least.
Black Course is highest, Gold Course next, Blue Course least.
Black Course is highest, Blue Course next, Gold Course least.
2. Assume you are the department B manager for Marley's Manufacturing. Marley's operates under a cost-based transfer structure. Assume you receive the majority of your raw materials from department A, which sells only to department B (they have no outside sales). After calculating the operating income in dollars and operating income in percentage, analyze the following financial information to determine costs that may need further investigation.
| Marley's Manufacturing Income Statement Month Ending August 31, 2018 | ||||
| Dept. A | Dept. B | |||
| Sales | $21,000 | $51,000 | ||
| Cost of goods sold | 10,080 | 26,010 | ||
| Gross profit | $10,920 | $24,990 | ||
| Expenses: | ||||
| Utility expenses | $1,050 | $2,550 | ||
| Wages expense | 5,250 | 10,200 | ||
| Costs allocated from corporate | 2,100 | 15,300 | ||
| Total expenses | $8,400 | $28,050 | ||
| Operating income/(loss) in dollars | $___ | $___ | ||
| Operating income/(loss) in percentage | ___ | % | ___ | % |
Department B had an operating loss.
Department A had an operating loss.
Department B has a higher wage percent of sales.
Department A receives a higher percent of allocated costs.
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