Question
Question 1a . Prepare the income statement for fiscal year 2019 in Table 2. Use the information given above and your calculations in Table 1.
Question 1a. Prepare the income statement for fiscal year 2019 in Table 2. Use the information given above and your calculations in Table 1. Selling and administrative expenses are given in Table 2. Assume that the number of units produced equal to the number of units sold. Use comma in the numbers you fill in Table 2. (10 points)
Table 2. Company X Income Statement 2019
Income Statement Year Ended Dec. 31, 2019 | |||
| Product A | Product B | Total |
Sales |
|
|
|
Cost of goods sold |
|
|
|
Gross margin |
|
|
|
Selling & Admin expenses | 780,000 | 2,640,000 | 3,420,000 |
Net profit |
|
|
|
Units produced & sold | 4,000 | 22,000 |
|
Net Profit per unit sold |
|
|
|
Information given above:
Company X is a manufacturing company. It produces two products: Product A and Product B. In fiscal year 2020, 4,000 units of Product A are sold at $1,260 per unit, and 22,000 units of Product B are sold at $900 per unit.
Per unit costs - | Product A | Product B |
Direct Materials | $650 | $250 |
Add: Direct Labor I (3.5*$20); (1.5 * $20) | $70 | $30 |
Add: Direct Labor II (4*$30); (8*$30) | $120 | $240 |
Add: Manufacturing overhead (4*$25); (8*$25) | $100 | $200 |
Manufacturing cost per unit | $940 | $720 |
Question 1b. Based on the net profits for each product, the CEO at company X has decided to concentrate the resources on product A and to phase out product B. Based on the calculations in Table 2, in text box below briefly discuss your suggestions.
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