Question
Use the following information to calculate the sales price of a boat under both GAAP and for internal decision purposes: Number of boats to be
Use the following information to calculate the sales price of a boat under both GAAP and for internal decision purposes:
| Number of boats to be sold | 500 | ||
| Upstream costs | $ | 5,000,000 | |
| Direct materials per boat | $ | 50,000 | |
| Direct labor per boat | $ | 30,000 | |
| Overhead per boat | $ | 20,000 | |
| Downstream costs | $ | 2,000,000 | |
(1). Assume the company wants to sell each boat for 20% more than the cost to produce the boat. Which of the following would be the sales price under GAAP and for internal decision purposes?
| GAAP | Internal Decision | |||||
| a) | $ | 120,000 | $ | 136,800 | ||
| b) | $ | 136,800 | $ | 136,800 | ||
| c) | $ | 120,000 | $ | 114,000 | ||
| d) | $ | 136,800 | $ | 114,000 | ||
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| ||||||
(2) Use the above information to determine net income in the financial statements under GAAP:
Assume the company wants to sell each boat for 20% more than the cost to produce the boat.
Multiple Choice
a. $10,000,000
b. $3,000,000
c. $7,000,000
d. $5,000,000
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Management Accounting For Business
Authors: Colin Drury, Mike Tayles
8th Edition
1473778808, 978-1473778801
