Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

CO C NOVA Knights just completed the 2022 fiscal period (January 1- December 31) and through management analysis and review of the income statement

imageimageimage

CO C NOVA Knights just completed the 2022 fiscal period (January 1- December 31) and through management analysis and review of the income statement the following information was determined: 1. Sales Revenue of $1,578,500 based on sales of 225,500 units. 2. Cost of Goods Sold totaled $1,014,750. 3.70% of COGS (Cost of Goods Sold) are variable. 4. Selling Expenses totaled $410,000. 5.45% of selling expenses are variable 6. Administrative Expenses totaled $189,300 7.40% of administrative expenses are variable Rounding and Calculation Instructions Round all costs per unit to 2 decimals FINAL break-even answers to the unit and dollar (no decimals). DO NOT Round the contribution margin ratio. . You will NOT maintain the same percentages of variable vs. fixed costs in each of the proposed plans. . . Use either Google Sheets or Excel (recommended) for all parts of this project. Required: formulas, functions and cell referencing throughout the project. Part 1. Using the information above prepare, in good form, a GAAP (accrual basis) income statement. determine net income (loss) and compute the break-even point in total sales dollars and in units for 2022. Prepare a CVP income statement format for Part 2 (plans A and B). Part 2. PLAN A-Lorna has proposed a plan to improve its profitability. Lorna feels that the quality of the final product could be substantially improved by spending $0.23 more per unit on higher quality raw materials. The selling price per unit could be increased to $7.35. Lorna projects that sales volume will increase by 22% Compute net income under Lorna's proposal and the break even point in units and sales dollars MacBook Air 22%. Compute net income under Lorna's proposal and the break-even point in units and sales dollars. (DO NOT Round the contribution margin ratio.) PLAN B - Anh was a sales and marketing major in college. Anh believes sales volume can be increased by using an intensive online advertising and social media promotional campaign. She proposed the following plan as an alternative to Lorna's: (1) improve sales incentives by increasing sales commission for each sale, this will increase the following variable costs: cost of goods sold to $3.16/per unit, selling expenses to $0.85/per unit, administrative expenses to $0.55/per units, (2) increase the selling price per unit by $0.57, and (3) increase fixed selling expenses by $45,840. Anh based her recommendations on a marketing research report that suggested that sales volume would increase by 21% if these changes were made. Compute net income under Anh's proposal and the break-even point in unit and sales dollars. (DO NOT Round the contribution margin ratio.) Part 3. Which plan do you believe should be accepted and why? Using good written communication, completely. and thoroughly explain your answer. Your score for this category will be based significantly on your persuasiveness and effectiveness to "sell" your conclusion to executives in the company. Managerial Accounting Analysis Rubric 2Rubric (2) Criteria Accurate Solutions Calculations are accurate. using formulas in the spreadsheet. Written Analysis at the 60 to 30.0 pts Meets Expectations Evaluation based upon the extent to which formulas were used and the accuracy of the results. 20 to 15.0 pts Eurende Expectations Ratings 15 to 10.0 pts 30 to 0 pts Below Expectations If formulas are not used in the spreadsheet and/or calculations and results are not accurate. 10 to 0 pts Balans Eenectations Pts 60 pts Part 3. Which plan do you believe should be accepted and why? Using good written communication, completely and thoroughly explain your answer. Your score for this category will be based significantly on your persuasiveness and effectiveness to "sell" your conclusion to executives in the company. Managerial Accounting Analysis Rubric 2Rubric (2) Criteria Accurate Solutions Calculations are accurate using formulas in the spreadsheet. Written Analysis This will evaluate the written solutions provided. by the submission- accuracy, thoughtfulness of answers, supported conclusion, effective written communication. Format and Presentation This will evaluate the professionalism of the submission, Format. presentation and complete. 60 to >30.0 pts Meets Expectations Evaluation based upon the extent to which formulas were used and the accuracy of the results. 20 to 15.0 pts Exceeds Expectations Submission is very well written, clear and concise thoughts/ideas. Creative solutions, Well supported supported and accurate answers, Ratings 20 to >10.0 pts Meets Expectations Format and presentation of the project meets or exceeds expectations. 30 to 0 pts Below Expectations If formulas are not used in the spreadsheet and/or calculations and results are not accurate. 15 to 10.0 pts Meets Expectations Submission provides; adequate answers to all questions but does not elaborate on answers, provides effective or creative thoughts/ideas that are reasonable or well supported. 10 to 0 pts Below Expectations Below expectations ratings would result from inaccurate answers, not complete answers, poor spelling/grammar/written communication, Incomplete answers. 10 to 0 pts Below Expectations Organization and presentation of the data/tables, and written answers are average or below average. Pts 60 pts 20 pts 20 pts Total Points: 100

Step by Step Solution

3.46 Rating (162 Votes )

There are 3 Steps involved in it

Step: 1

Part 1 Income Statement GAAP Income Statement 2022 Sales Revenue 1578500 Cost of Goods Sold 1014750 Gross Profit 563750 Selling Expenses 410000 Administrative Expenses 189300 Total Operating Expenses ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

9th Edition

1337614689, 1337614688, 9781337668262, 978-1337614689

More Books

Students also viewed these Accounting questions