Exercise PR6-6B Financial & Managerial Accounting Edition 15
Belmain Co. Estimated Income Statement For the Year Ended December 31, 20Y7 Sales Cost of goods sold: Direct materials Direct labor Factory overhead Cost of goods sold Gross prof Expenses: Selling expenses Sales salaries and commissions Advertising Travel Miscellaneous selling expense Total selling expenses Administrative expenses: Office and officers' salaries Supplies Miscellaneous administrative expense Total administrative expenses Total expenses Operating income Contribution margin ratioc Sales Units Unit Variable Cost Variable costs Contribution margin Sales Contribution margin ratio Break-even sales: Fixed costs Sale Price - Unit Variable Cost Unit contribution margin Break-even sales (units) Sale price Break-even sales (dollars) For each unit level of sales, enter the total sales dollars and total costs. The chart at right will be plotted as you enter the amounts. After all points are plotted, grab and move the labels provided at the left to identify each area. Units Sales $ Costs $ 0 2,000 Cost-Volume-Profit Chart 4.000 5,000 8,00 10,000 12,000 14,000 16,000 18,000 $1 Sales and Costs -Sales $ Operating Loss Break-Even $1 Area Point -Costs $ $0 Operating Profit Area 50 $ 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Units Margin of safety. Sale Price Units Expected sales Break-even point Margin of safety (in dollars) Expected sales Margin of safety (as a percentage of sales) Operating leverage: Unit CM $ Units Contribution margin Operating income Operating leveragePR 6-68 Lower-of-cost-or-market inventory Obj. 6 Data on the physical inventory of Katus Products Co. as of December 31 follows: Market Value per Inventory Unit (Net Description Quantity Realizable Value) A54 $ 56 C77 178 F66 132 H.83 545 K12 375 Q58 536 235 V97 Y88 744 Quantity and cost data from the last purchases invoice of the year and the next-to-the-last purchases invoice are summarized as follows: Last Next-to-the-Last Purchases Invoice Purchases Invoice Quantity Unit Quantity Unit Description Purchased Cost Purchased Cost A54 $ 60 $ 58 C77 174 180 F66 130 540 H83 547 gunnggen K12 58 260 36 740 (Continued)Inventories Instructions Determine the inventory at cost and also at the lower of cost or market applied on an by-item basis, using the first-in, first-out method. Record the appropriate unit costs on inventory sheet, and complete the pricing of the inventory. When there are two different costs applicable to an item, proceed as follows: 1. Draw a line through the quantity, and insert the quantity and unit cost of the last punt 2. On the following line, insert the quantity and unit cost of the next-to-the-last purchas 3. Total the cost and market columns and insert the lower of the two totals in the LCM colin first item on the inventory sheet has been completed as an example. Inventory Sheet December 31 Market Value per Total Inventory Cost per Unit (Net Description Quantity Unit Realizable Value) Cost Market LCM A54 37 30 $60 $56 $1,800 51,680 406 392 52,206 $2,072 52.072
