Task-1: Tom, the manager of ABC company, has reviewed a draft of his financial statements. Tom...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Task-1: Tom, the manager of ABC company, has reviewed a draft of his financial statements. Tom receives a year-end bonus of 20% of the company income. The income statement was provided by the factory accountant was diappointing for Tom. After reviewing the numbers, Tom that the accountant has to work again on that numbers which are in this draft Income Statement. Tom insisted that if he did not see a better income number he will fire the accountant. ABC company classifies all costs directly related to the manufacturing of its product as product costs. These costs are inventoried and later expensed as costs of goods sold when the product is sold. All other expenses, including finished goods warehousing costs of 4,000,000 USD, are classified as period expenses. Tom had suggested that warehousing costs be included as product costs because he believes that they are belonging to product costs. The company produced 200,000 units during the period and sold 150,000 units. As the accountant worked on the numbers again, she discovered that if she included warehousing costs as product costs, she could improve operating income by 500,000 USD. She was also sure these new numbers will make Tom happy. Requirements: 1. Indicate numerically how income would be improve by 500,000 USD by classifying the preceding costs as product costs instead of period expenses. 2. Is Tom correct in his justification that costs like Warehouse costs belongs to product cost? 3. By how much will Tom profit personally if the accountant make the adjustment in requirment 1? 4. What should the factory accountant do? Task-1: Tom, the manager of ABC company, has reviewed a draft of his financial statements. Tom receives a year-end bonus of 20% of the company income. The income statement was provided by the factory accountant was diappointing for Tom. After reviewing the numbers, Tom that the accountant has to work again on that numbers which are in this draft Income Statement. Tom insisted that if he did not see a better income number he will fire the accountant. ABC company classifies all costs directly related to the manufacturing of its product as product costs. These costs are inventoried and later expensed as costs of goods sold when the product is sold. All other expenses, including finished goods warehousing costs of 4,000,000 USD, are classified as period expenses. Tom had suggested that warehousing costs be included as product costs because he believes that they are belonging to product costs. The company produced 200,000 units during the period and sold 150,000 units. As the accountant worked on the numbers again, she discovered that if she included warehousing costs as product costs, she could improve operating income by 500,000 USD. She was also sure these new numbers will make Tom happy. Requirements: 1. Indicate numerically how income would be improve by 500,000 USD by classifying the preceding costs as product costs instead of period expenses. 2. Is Tom correct in his justification that costs like Warehouse costs belongs to product cost? 3. By how much will Tom profit personally if the accountant make the adjustment in requirment 1? 4. What should the factory accountant do?
Expert Answer:
Answer rating: 100% (QA)
Answer 1 Total warehousing cost USD 4000000 total units produced 200000 Total u... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
The manager of ABC Marketing, a small but dynamic organisation that specialises in marketing for technical firms, has requested that Brian, Lee and Ari, who have just joined the organisation as...
-
Jones is the manager of ABC Auto Repair. Unbeknownst to his employer, Jones also does freelance auto repair work to earn extra cash. He sometimes uses ABCs facilities and tools for these jobs....
-
The accountant of ABC Company has calculated the following variances: Calculate the total direct labor variance of ABC Company. Direct materials cost variance Direct materials variance Direct labor...
-
Suppose a state was trying to decide whether to fund primary and secondary education with a property tax or an income tax. What implications might this choice have for land use in the state?
-
Consider a model at the employee level, yi,e = (0 + (1xi,e,1 + (2xi,e,2 + ... + (kxi,e,k + fi + vi,e' where the unobserved variable fi is a "firm effect" to each employee at a given firm i. The error...
-
Sakai Manufacturing purchased land next to its factory to be used as a parking lot. The expenditures incurred by the company were as follows: purchase price, $300,000; broker's fees, $24,000; title...
-
Haar transform (a) For an \(N \times N\) Haar transformation matrix, the Haar basis functions are \[\psi_{k}(t)=\psi_{p q}(t)=\frac{1}{\sqrt{N}} \begin{cases}2^{p / 2}, & (q-1) / 2^{p} \leq t
-
As she headed toward her boss's office, Emily Hamilton, chief operating officer for the Aerocomp Corporation-a computer services firm that specialized in airborne support-wished she could remember...
-
John is a farmer. In three months, his harvest will be ready and he will sell a big contract of 500,000 pounds of wheat. The spot market price of wheat is now $0.50 per pound but it is likely to...
-
On January 1. Ruiz Company issued bonds as follows: Face Value: Number of Years: Stated Interest Rate: Interest payments per year 500,000 15 7% Required: 1) Calculate the bond selling price given the...
-
Officers Jones and Henderson are well-respected police officers in the Woodlawn community. They have been recognized, both within the police department and by the community, for their outstanding...
-
2. After taking her first course in business mathematics, Alyssa is interested in purchasing a 180-day T-Bill with a face value of $20,000 and a rate of 3.5% p.a. (6 points) a) Calcule le prix...
-
Assume that most of the investors in the stock market are active in an online chat group. As one of the investors holding ABC shares, you find out that the ABC stock has an expected return of 9.8%...
-
The company's total assets are 39,500 The following listing of the company's accounts and account balances as of Dec 31, Year 3 Accounts Payable 7,700 Accounts Receivable 8,000 Supplies 1,700...
-
Sometimes, companies must accrue (or at least disclose) a potential loss. Find a loss contingency on the books of a company and tell us about it (1) What is the situation? (2) Is the potential loss...
-
It is February 2021. A manufacturer expects to purchase 6000 metric tons of aluminum in August 2021. Considering the recent uptrend in the aluminum market, the company plans on using the August 2021...
-
How do you monitor and analyze replication performance metrics, including latency, throughput, and error rates, to proactively identify bottlenecks, optimize resource utilization, and ensure the...
-
Imagine that your best friend knows you are taking a psychology course and wonders what psychology is all about. How would you define psychology for your friend? Write an essay on the discipline of...
-
In the case study Chipping Away at High-Tech Theft, do you believe the procedures and controls maintained by the manufacturer contributed to the theft? Why or why not?
-
During the audit of financial statements, an auditor discovers that the financial statements might be materially misstated due to the existence of fraud. Describe (1) The auditors responsibility...
-
What are some nonverbal clues to deception?
-
Jenny and Donny were married in 2015 and have two children, Chase and Ruby. Donny filed for divorce in 2017 and the divorce was finalized in 2018. Donny has custody of the children and received the...
-
Jerome received a home as a gift from his uncle on March 15, 2023. His uncle paid \($250,000\) and its fair market value on March 15 is \($400,000.\) Jeromes uncle paid gift tax of \($10,000.\) What...
-
Myrtle had been sick for quite some time and she passed away in July. Her will indicated her beneficiaries are to receive the following: Miriam, her daughter, will receive Myrtles home worth...
Study smarter with the SolutionInn App