Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Step: 3

blur-text-image

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

Technical Audit A Thoroughfare Of System Perfection MBTA Management By Technical Audit

Authors: Shankar Bakhsh Srivastava

1st Edition

3848483343, 978-3848483341

More Books

Students also viewed these Accounting questions

Question

The nature and importance of the global marketplace.

Answered: 1 week ago