Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Soccer Ball Inc., a wholesaler of youth soccer balls, prepared the income statement for the year ended December 31, 2015 (see Exhibit 1): Exhibit 1

Soccer Ball Inc., a wholesaler of youth soccer balls, prepared the income statement for the year ended December 31, 2015 (see Exhibit 1):

Exhibit 1

Income Statement

Sales ( 1,760,000 units)

$10,560,000

Cost of sales

$6,336,000

Gross margin

$4,224,000

Delivery costs

Containers

$170,000

Packing and Shipping Labor

$410,000

Freight

$800,000

$1,380,000

Selling Costs

Sales Manager

$50,000

Sales Salaries

$90,000

Commissions

$80,000

Sports Consortium Commissions

$70,000

Bad Debts

$37,248

$327,248

Advertising

Educational Media

$100,000

Sport Industry Media

$85,000

$185,000

General Business Support

$140,000

Operating Profit

$2,191,752

The company sells soccer balls to schools, childrens sports teams, and sporting goods stores which represents 4 segments. The selling price per unit is $ 6. Costs of sales are variable costs.

Large public and private schools receive advertising through educational media, and place orders directly to Soccer ball Inc. No sales Staff calls are made. Orders are received through the mail, fax, telephone or by computer. School districts arrange for their own delivery and send a truck to the wholesaler to pick up orders when they are ready.

Smaller private schools located with 100 mile radius of the wholesaler are visited by salesmen. These salesmen are paid commissions, and are not company employees.

Sporting goods stores within a 400 miles radius of the wholesaler are visited by 4 salesmen who are company employees and are paid a salary.

Childrens sports teams within 600 miles radius of the wholesaler are contacted through a sports consortium which sells to leagues. Advertising is done through sports industry media. The cost of that

1

advertising is shared 50/50 with the sports consortium. The sports consortium receives a commission on their sales.

The Sales manager oversees the sales to all segments.

Soccer balls are sold in containers of three (3) different sizes: namely, 16s (small), 32s (medium), and 48s (large). Each order is comprised of a cases lot of o appropriate containers. The units associated with the packaging each case are depicted in Exhibit 2.

Exhibit 2

Small

Medium

Large

Container

$2

$3

$4

Packing & shipping labor

$6

$7

$8

In addition, delivery freight is charged to Soccer Inc., based on the number of containers shipped and delivery miles.

During 2015, an analysis of the marketing operations was made. Exhibit 3 shows the results of that analysis.

Exhibit 3

Total

Large schools

Small Private

Schools

Sporting

Goods Stores

Sports

Team Sales

Number of orders

Small Cases

20000

4000

16000

Medium Cases

30000

8000

5000

15000

2000

Large Cases

10000

7000

3000

Provision for Uncollectible accounts % of sales

0.30%

0.20%

0.40%

0.50%

Required

Prepare a statement showing the gross profit (sales less cost of goods sold) of each container size of balls sold.

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

More Books

Students also viewed these Accounting questions