(1)
To identify:
The product line with highest overhead cost if it is being assigned on the basis of their sales.
(2)
Overhead: It is the indirect cost which is not directly related to any product. These are the cost which cannot be identified with any product directly. So, the company distributes these costs on the product on some specified basis.
To discuss:
The product line with lowest overhead cost if it is being assigned on the basis of their sales.
(3)
The change observed in the sales volume when compared to the previous year’s data in terms of ratio or percentage.
To compute:
The ratio of change in sale from last year to current year.
Want to see the full answer?
Check out a sample textbook solutionChapter 4 Solutions
Managerial Accounting
- The following revenue data were taken from the December 31, 2017, General Electric annual report (10-K): For each segment and each year, calculate intersegment sales (another name for transfer sales) as a percentage of total sales. Using Microsoft Excel or another spreadsheet application, create a clustered column graph to show the 2016 and 2017 percentages for each division. Comment on your observations of this data. How might a division sales manager use this data?arrow_forwardThe following revenue data were taken from the December 31, 2017, Coca-Cola annual report (10-K): For each segment and each year, calculate intersegment sales (another name for transfer sales) as a percentage of total sales, Using Microsoft Excel or another spreadsheet application, create a clustered column graph to show the 2016 and 2017 percentages for each division. Comment on your observations of this data. How might a division sales manager use this data?arrow_forwardWachowski Company reported these cost data for the year 2017. Use the data to complete the following table. Total prime costs Total manufacturing overhead costs Total conversion costs Total product costs Total period costsarrow_forward
- Compute cost of goods sold for 2017 using the following information. Finished goods inventory, Dec. 31, 2016 Work in process inventory, Dec. 31, 2016 Work in process inventory, Dec. 31, 2017 Cost of goods manufactured, 2017 Finished goods inventory, Dec. 31, 2017 Cost of Goods Sold is Computed as: Cost of goods sold $ 348,000 87,000 73,200 915,700 337,000arrow_forwardAccording to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Gonzalez Industries for the year ended December 31, 2018. Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income Required 1 Required 2 2018 $ 117,000 68,500 48,500 37,700 Year 670 10, 130 2,500 $ 7,630 2017 2018 2017 $ 145,500 Required: 1. Compute the times interest earned ratios for 2018 and 2017. 2. Does Gonzalez generate sufficient net income in both years (before taxes and interest) to cover the cost of debt financing? 78,300 67,200 40,400 Complete this question by entering your answers in the tabs below. 560 26,240 6,700 $ 19,540 Compute the times interest earned ratios for 2018 and 2017. (Round your answers to 1…arrow_forwardThe Kroger Company reported the following data in its annual report (in millions). January 28, 2017 January 30, 2016 January 31, 2015 Net sales $115,337 $109,830 $108,465 Cost of sales (using LIFO) 89,502 85,496 85,512 Year-end inventories using FIFO 7,852 7,440 6,933 Year-end inventories using LIFO 6,561 6,168 8,178 Instructions a. Compute Kroger's inventory turnovers for fiscal years ending January 28, 2017, and January 30, 2016, using: 1. Cost of sales and LIFO inventory. 2. Cost of sales and FIFO inventory. b. Some firms calculate inventory turnover using sales rather than cost of goods sold in the numerator. Calculate Kroger's fiscal years ending January 28, 2017, and January 30, 2016, turnover, using: 1. Sales and LIFO inventory. 2. Sales and FIFO inventory. c. State which method you would choose to evaluate Kroger's performance. Justify your choice.arrow_forward
- According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Gonzalez Industries for the year ended December 31, 2018. Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income Required 1 Required 2 Required 3 2018 $ 105,000 62,500 Required: 1. Compute the gross profit percentage for each year. Assuming the change from 2017 to 2018 is the beginning of a sustained trend, is Gonzalez likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Gonzalez do a better or worse job of controlling operating expenses in 2018 relative to 2017? 3. Gonzalez reported average net fixed assets of $54,700 in 2018 and $45,600 in…arrow_forwardAccording to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Gonzalez Industries for the year ended December 31, 2018. Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income Required 1 Required 2 Required 3 2018 $ 105,000 62,500 42,500 36,500 Required: 1. Compute the gross profit percentage for each year. Assuming the change from 2017 to 2018 is the beginning of a sustained trend, is Gonzalez likely to earn more or less gross profit from each dollar of sales in 2019? 2. Compute the net profit margin for each year. Did Gonzalez do a better or worse job of controlling operating expenses in 2018 relative to 2017? 550 5,450 1,500 $ 3,950 3. Gonzalez reported average net fixed assets…arrow_forwardThe problem is stated in the picture. Here is the question: 1. Assume instead, the Company uses the Moving Average method in the measurement of its inventories, how much would be the weighted average cost per unit of the sales made at May 20? (Round off the final answers to two decimal places)arrow_forward
- According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Wizard Computers for the year ended December 31, 2018. 2018 2017 Sales Revenue $ 118,000 $ 147,000 Cost of Goods Sold 69,000 78,700 Gross Profit 49,000 68,300 Selling, General, and Administrative Expenses 37,800 40,600 Interest Expense 680 565 Income before Income Tax Expense 10,520 27,135 Income Tax Expense 2,500 6,800 Net Income $ 8,020 $ 20,335 Required: Compute the times interest earned ratios for 2018 and 2017. Does Wizard generate sufficient net income in both years (before taxes and interest) to cover the cost of debt financing? yes or noarrow_forwardAccording to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Let’s see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. 2016 2015 Sales Revenue $ 120,000 $ 150,000 Cost of Goods Sold 70,000 79,500 Gross Profit 50,000 70,500 Selling, General, and Administrative Expenses 38,000 41,000 Interest Expense 700 575 Income before Income Tax Expense 11,300 28,925 Income Tax Expense 2,500 7,000 Net Income $ 8,800 $ 21,925 Required: Compute the gross profit percentage for each year. Assuming that the change from 2015 to 2016 is the beginning of a sustained trend, is Computer Tycoon likely to earn more or less gross profit from each dollar of sales in 2017? Compute the net profit margin…arrow_forwardAccording to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Required: ts 1. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. 2-a. Conduct a vertical analysis by expressing each line as a percentage of total revenues. 2-b. Excluding income tax, interest, and operating expenses, did Computer Tycoon earn more profit per dollar of sales in 2016 compared to 2015? еВook Hint Print Complete this question by entering your answers in the tabs below. eferences Req 1 Reg 2A Reg 2B Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. (Decreases…arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College