Question
Buffalo, Inc. is a company that manufactures and sells a single product. Unit sales for each of the four quarters of 2020 are projected as
Buffalo, Inc. is a company that manufactures and sells a single product. Unit sales for each of the four quarters of 2020 are projected as follows.
Quarter | Units | ||
First | 80,000 | ||
Second | 150,000 | ||
Third | 550,000 | ||
Fourth | 120,000 | ||
Annual total | 900,000 |
Buffalo incurs variable manufacturing costs of $0.30 per unit and variable nonmanufacturing costs of $0.35 per unit. Buffalo will incur fixed manufacturing costs of $720,000 and fixed nonmanufacturing costs of $1,080,000. Buffalo will sell its product for $4 per unit.
(a)
Determine the amount of net income Buffalo will report in each of the four quarters of 2020, assuming actual sales are as projected and employing the integral approach to interim financial reporting. (Ignore income taxes.) Repeat the analysis under the discrete approach. (Round answers to 0 decimal places, e.g. 5,125.)
Compute Buffalos profit margin on sales for each of the four quarters of 2020 under both the integral and discrete approaches. (Round answers to 1 decimal place, e.g. 52.5%.)
Profit margin on sales | |||||||||
1st Quarter | 2nd Quarter | 3rd Quarter | 4th Quarter | ||||||
Integral approach | % | % | % | % | |||||
Discrete approach | % |
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