Fairfield Stores, a retailer in a shopping mall, prepared the following income statement for its operations...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Fairfield Stores, a retailer in a shopping mall, prepared the following income statement for its operations for the month just ended: FAIRFIELD STORES Income Statement For the Month Ended April 30 Sales $600,000 Cost of goods sold 288,000 Gross profit 312,000 Operating expenses: Sales commissions expense $90,000 Advertising expense 72,000 Lease expense 24,000 Depreciation expense 12,000 Salaries expense 36,000 Other operating expenses 18,000 252,000 60,000 Income before income taxes Income tax expense Net income 24,000 $36,000 Sales commissions were 15% of sales. Income taxes were 40% of income before income taxes. Both should continue at the same rate for the remainder of the year. Fairfield Stores is preparing the budget for the month of May. If no basic changes are made, Fairfield's management expects that the income statement would be virtually identical to the one for April. However, Fairfield's management has decided to make some changes in the operations. The plans include the following: 1. Increase advertising expense by 40%, 2. Decrease all selling prices by 10%. 3. Increase the number of units sold by 25% as a result of the first two changes. a. Prepare a budgeted income statement for the month of May, Round all amounts on the income statement to the nearest dollar. Sales Cost of Goods Sold FAIRFIELD STORES Budgeted Income Statement For the Month Ended May 31 $675,000 324,000 x Gross Profit 351,000 Operating Expenses Sales Commission Expense $ Advertising Expense Lease Expense 101,250 100,800 24,000 Depreciation Expense 12,000 Salaries Expense 36,000 Other Operating Expenses 18,000 292,050 Income (Loss) before Income Taxes 58,950 Income Tax Expense Net Income (Loss) b. Complete the following statement: 57,544 x 1,406 Fairfield Stores, a retailer in a shopping mall, prepared the following income statement for its operations for the month just ended: FAIRFIELD STORES Income Statement For the Month Ended April 30 Sales $600,000 Cost of goods sold 288,000 Gross profit 312,000 Operating expenses: Sales commissions expense $90,000 Advertising expense 72,000 Lease expense 24,000 Depreciation expense 12,000 Salaries expense 36,000 Other operating expenses 18,000 252,000 60,000 Income before income taxes Income tax expense Net income 24,000 $36,000 Sales commissions were 15% of sales. Income taxes were 40% of income before income taxes. Both should continue at the same rate for the remainder of the year. Fairfield Stores is preparing the budget for the month of May. If no basic changes are made, Fairfield's management expects that the income statement would be virtually identical to the one for April. However, Fairfield's management has decided to make some changes in the operations. The plans include the following: 1. Increase advertising expense by 40%, 2. Decrease all selling prices by 10%. 3. Increase the number of units sold by 25% as a result of the first two changes. a. Prepare a budgeted income statement for the month of May, Round all amounts on the income statement to the nearest dollar. Sales Cost of Goods Sold FAIRFIELD STORES Budgeted Income Statement For the Month Ended May 31 $675,000 324,000 x Gross Profit 351,000 Operating Expenses Sales Commission Expense $ Advertising Expense Lease Expense 101,250 100,800 24,000 Depreciation Expense 12,000 Salaries Expense 36,000 Other Operating Expenses 18,000 292,050 Income (Loss) before Income Taxes 58,950 Income Tax Expense Net Income (Loss) b. Complete the following statement: 57,544 x 1,406
Expert Answer:
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-0470239803
5th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Posted Date:
Students also viewed these accounting questions
-
Correct AnswerQuestion Compensation cost is determined by the grant-date fair value measured using option-pricing models. Grant-date compensation cost is recognized as an expense on a straight-line...
-
is $218,000 and the annual cost of maintaining it is $1,000. If the useful life of a full form printer is assumed to be 20 years, how many full form printers could the department afford to rent each...
-
Consider the following statements: I. Duration remain unchanges as the bond approaches maturity II . While using the repricing gap model for balance sheet immunization, there is a trade - off between...
-
What type of motor would you specify for a meat grinder if the motor is to be exposed?
-
Compare and contrast the rules for allocating nonbusiness gains and losses in Mississippi, Maryland, and Hawaii. Based on the corporate tax rate structure, which state would be most desirable for...
-
You bought an option that limits the interest rate on a future six-month loan to, at most, 10 percent p.a. (a) If, at the beginning of the six-month period, the interest rate is 11 percent, what is...
-
Ajax Meter Company manufactures a variety of measuring instruments. One product is an altimeter used by hikers and mountain climbers. Ajax adopted a just-in-time philosophy with an automated,...
-
The following information relates to La Greca Co. for the year 2015. Retained earnings, January 1, 2015 .......$48,000 Dividends during 2015 ........... 5,000 Service revenue .............. 62,500...
-
AF Electronics is considering two plans for raising $1,000,000 to expand operations. Plan A is to issue 4% bonds payable, and plan B is to issue 300,000 shares of common stock. Before any new...
-
Zemco (Pty) Ltd has generated excess cash in the past financial year even though it is a newly established company. The senior management have decided to give themselves performance-linked bonuses...
-
Zipp Company manufactures two products (X and Y). The overhead costs (90,000) have been divided into three cost pools: setups 30,000; machining 30,000; ordering 30,000. Product X had 5 setups, 1000...
-
(d) A C function for the matrix-vector multiply using Compressed Row Storage is shown below: 1 int mat_vec(float *v, struct CRS_mat M, float *u){ 2 int i,j; 3 4 5 6 for(i=0;i
-
Presented below are selected balance sheet information and the income statement for Burch Company. Selected Balance Sheet Information Jan. 1 Dec. 31 Cash $11,400 $17,500 Accounts receivable 8,000...
-
Navistar International and Boyne Resorts The Navistar International video demonstrates the use of standard costs and variance analysis in a manufacturer of trucks and diesels engines with forty major...
-
Describe three major steps in the process of developing a relevant communication strategy within a named societal sector
-
Now suppose that a friend has applied to colleges C and D, with acceptance probabilities of 0.80 and 0.50, respectively, and a 0.40 probability of acceptance to both
-
Which provision could best be justified as encouraging small business? a. Ordinary loss allowed on $ 1244 stuck. b. Percentage depletion. c. Domestic production activates deductions. d. Interest...
-
The standard costs for a manufacturing business are \($12\) per unit for direct materials, \($8\) per unit for direct labour, and \($5\) per unit for manufacturing overhead. The sales projection is...
-
What is Munchs expected profit for April? a. $192,500 b. $56,000 c. $66,000 d. $59,000 Munch Enterprises makes a small toy car that is voice activated. Projected sales for the next four months are...
-
Bobby Jones Inc. is planning sales of 55,000 units for the next three months. The company has a beginning inventory of 10,000 units and would like to have an ending inventory of 15,000 at the end of...
Study smarter with the SolutionInn App