Brown Boot Company Income statement December 31, 20X2-20X4 (20X5 budget) 20X2 20X3 20X4 20X5 budget Volume...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Brown Boot Company Income statement December 31, 20X2-20X4 (20X5 budget) 20X2 20X3 20X4 20X5 budget Volume produced (pairs) Volume sold (pairs) Selling price per pair 1,275,000 1,274,500 97.15 $ 1,250,000 1,225,000 97.15 $ 1,250,000 1,197,500 96.60 $ 1,200,000 1,175,000 96.50 $ (all figures in '000s) $ 123,818 $ Total revenue Cost of goods sold (Schedule 1) Gross margin Variable selling and administrative expense $ Fixed selling and administrative expense $ Total expenses Surplus (deficit) 119,009 $ 115,679 $ 113,388 81.829 41,989 $ 87.443 31,566 $ 85,929 $ 29,750 78.216 35,172 $ 7,429 $ 5,950 $ 8,098 $ 7,937 18.789 $ 26.218 $ $4 17.685 $ 23.635 $ 7.931 $ 17.035 $ 17.035 24.972 10.200. 25.133 2$ 15.771 $ 4.617 $ Brown Boot Company Schedule of cost of goods sold December 31, 20X2-20X4 (20X5 budget) (in $'000s) 20X2 Units 20X3 20X4 20X5 budget Units Cost Cost Units Cost Units Cost Beginning finished goods inventory 20,000 1,302 20,500 1,316 45,500 3,253 98,000 7,033 Add: Manufactured (Schedule 2) Available for sale 1,275,000 1,295,000 81,843 1,250,000 89,380 1,250,000 89,709 1,200,000 79,312 83,145 1,270,500 90,696 1,295,500 92,962 1,298,000 86,345 Deduct: Ending finished goods inventory Cost of goods sold 98,000 81,829 1,225,000 87,443 1,197,500 85,929 1,175,000 78,216 1,316 3,253 7,033 8,129 20,500 1,274,500 45,500 123,000 Note: For clarity, units are shown in full while costs are shown in '000s. %24 Schedule 2– Cost of goods manufactured Brown Boot Company Schedule of cost of goods manufactured December 31, 20X2-20X4 (20X5 budget) (in $'000s) 20X5 20X2 20X3 20X4 budget 43,992 22,308 $ 47,239 46,786 $ 28,135 Direct materials used $ 50,715 $ 25,340 Direct labour 22,504 Overhead applied' Variable overhead applied $ Fixed overhead applied Total manufacturing overhead costs applied $ $ 8,200 $ 5,125 $ 9,100 $ 5,688 $ 7,446 7,392 $ 4,654 5,620 12,100 $ 13,325 $ 14,788 $ 13,012 Total cost of goods manufactured2 $81,843 $ 89,380 $ 89,709 $ 79,312 1 BBC uses first in, first out inventory costing and a normal costing system to apply overhead to inventory. Over- or underapplied overhead is negligible. 2 Beginning and ending work-in-process inventory is not considered because the difference between beginning and ending balances is negligible. The cost of goods sold schedule shows a buildup of product that is putting a strain on the warehouse. The operations manager has noted that word from the marketing team is that the company needs to produce to increase the bottom line and keep unit costs low. Required: a) Using the information provided, prepare a variable costing income statement that incorporates the cost of goods sold for years 20X3 and 20X4 (in '000s). Assume for variable costing that the opening inventory for 20X3 is $1,241,000. (8 marks) b) Prepare a reconciliation of the differences in absorption costing and variable costing incomes for both years (2 marks). Explain the following: (3 marks) What effect will building ending inventory balances have on profit? What reason might the marketing manager have for increasing inventory levels? Provide numerical data to support the reason. What are the ethical issues that management needs to address, if any? Brown Boot Company Income statement December 31, 20X2-20X4 (20X5 budget) 20X2 20X3 20X4 20X5 budget Volume produced (pairs) Volume sold (pairs) Selling price per pair 1,275,000 1,274,500 97.15 $ 1,250,000 1,225,000 97.15 $ 1,250,000 1,197,500 96.60 $ 1,200,000 1,175,000 96.50 $ (all figures in '000s) $ 123,818 $ Total revenue Cost of goods sold (Schedule 1) Gross margin Variable selling and administrative expense $ Fixed selling and administrative expense $ Total expenses Surplus (deficit) 119,009 $ 115,679 $ 113,388 81.829 41,989 $ 87.443 31,566 $ 85,929 $ 29,750 78.216 35,172 $ 7,429 $ 5,950 $ 8,098 $ 7,937 18.789 $ 26.218 $ $4 17.685 $ 23.635 $ 7.931 $ 17.035 $ 17.035 24.972 10.200. 25.133 2$ 15.771 $ 4.617 $ Brown Boot Company Schedule of cost of goods sold December 31, 20X2-20X4 (20X5 budget) (in $'000s) 20X2 Units 20X3 20X4 20X5 budget Units Cost Cost Units Cost Units Cost Beginning finished goods inventory 20,000 1,302 20,500 1,316 45,500 3,253 98,000 7,033 Add: Manufactured (Schedule 2) Available for sale 1,275,000 1,295,000 81,843 1,250,000 89,380 1,250,000 89,709 1,200,000 79,312 83,145 1,270,500 90,696 1,295,500 92,962 1,298,000 86,345 Deduct: Ending finished goods inventory Cost of goods sold 98,000 81,829 1,225,000 87,443 1,197,500 85,929 1,175,000 78,216 1,316 3,253 7,033 8,129 20,500 1,274,500 45,500 123,000 Note: For clarity, units are shown in full while costs are shown in '000s. %24 Schedule 2– Cost of goods manufactured Brown Boot Company Schedule of cost of goods manufactured December 31, 20X2-20X4 (20X5 budget) (in $'000s) 20X5 20X2 20X3 20X4 budget 43,992 22,308 $ 47,239 46,786 $ 28,135 Direct materials used $ 50,715 $ 25,340 Direct labour 22,504 Overhead applied' Variable overhead applied $ Fixed overhead applied Total manufacturing overhead costs applied $ $ 8,200 $ 5,125 $ 9,100 $ 5,688 $ 7,446 7,392 $ 4,654 5,620 12,100 $ 13,325 $ 14,788 $ 13,012 Total cost of goods manufactured2 $81,843 $ 89,380 $ 89,709 $ 79,312 1 BBC uses first in, first out inventory costing and a normal costing system to apply overhead to inventory. Over- or underapplied overhead is negligible. 2 Beginning and ending work-in-process inventory is not considered because the difference between beginning and ending balances is negligible. The cost of goods sold schedule shows a buildup of product that is putting a strain on the warehouse. The operations manager has noted that word from the marketing team is that the company needs to produce to increase the bottom line and keep unit costs low. Required: a) Using the information provided, prepare a variable costing income statement that incorporates the cost of goods sold for years 20X3 and 20X4 (in '000s). Assume for variable costing that the opening inventory for 20X3 is $1,241,000. (8 marks) b) Prepare a reconciliation of the differences in absorption costing and variable costing incomes for both years (2 marks). Explain the following: (3 marks) What effect will building ending inventory balances have on profit? What reason might the marketing manager have for increasing inventory levels? Provide numerical data to support the reason. What are the ethical issues that management needs to address, if any?
Expert Answer:
Answer rating: 100% (QA)
A BROWN BOOT COMPANY VARIABLE COSTING INCOME STATEMENT PARTICULARS 20X3 20X4 VOLUME PRODUCED 1250000 1250000 VOLUME SOLD 1225000 1197500 SELLING PRICE ... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0078025556
8th edition
Authors: Robert Libby, Patricia Libby, Daniel Short
Posted Date:
Students also viewed these business communication questions
-
An incomplete cost of goods manufactured schedule is presented below. InstructionsComplete the cost of goods manufactured schedule for Cepeda Manufacturing Company. CEPEDA MANUFACTURING COMPANY Cost...
-
Tina Birk believes that the cost of goods manufactured schedule in job order cost accounting is the same as shown in Chapter 19. Is Tina correct? Explain.
-
Jane Neff believes that the cost of goods manufactured schedule in job order cost accounting is the same as shown in Chapter 14. Is Jane correct? Explain.
-
THE iterative software development method. Just read the case thoroughly and answer the below-mentioned 3 questions. Here are the three questions to be answered: 1. What are the two choices Lalonde...
-
Bonnies charitable contributions and AGI for the past four years were as follows: What is the amount of the charitable deduction for each year and the order in which the deduction and carryovers are...
-
1. Why are Drs. Andropov and Brown frustrated and angry about the suggestions from Holbrook, Girard, and Castillo?
-
Nationwide Insurance developed a program to recruit new insurance agents by offering planning, training, and start-up financing to build self-sustaining agencies. These new agents would be...
-
Bogart Company is considering two alternatives. Alternative A will have revenues of $160,000 and costs of $100,000. Alternative B will have revenues of $180,000 and costs of $125,000. Compare...
-
Fickle Sickles collects 15,000 checks per 365-day year with average amount $170 and total delay 5 days. A lockbox system would reduce that delay to 3 days, and it would also reduce FISI's check...
-
The eight members of the Model United Nations team from Pima Community College are lining up for a photo. a) How many different ways can the eight team members line up? b) What is the probability...
-
43. In 2008, U.S. GNP exceeded U.S. GDP by approximately $133 billion. This implies that A US factor income cared abroad exceeded foreign factor income by $133 billion. BUS. factor income named...
-
Mason Company provided the following data for this year: Sales $ 6 5 3 , 0 0 0 Direct labor cost $ 8 4 , 0 0 0 Raw material purchases $ 1 3 7 , 0 0 0 Selling expenses $ 1 1 0 , 0 0 0 Administrative...
-
An object is placed 11 cm in front of a concave mirror whose focal length is 24 cm. The object is 2.9 cm tall. Please answer the following questions without doing any calculations. Remember to...
-
Prepare an income statement and balance sheet as of December 3 1 , 2 0 1 8 , for the Choi. Co . , from the following information: ( 1 0 points ) : Accounts receivable $ 1 2 0 , 0 0 0 Machinery and...
-
According to Noble INC's balance sheet as of Dec. 2021, the company has $724,000 in Current Assets and $686,000 in Current Liabilities. The company's quick ratio is 0.8. Calculate the company's...
-
A 12.0 kg bucket is lowered vertically by a rope in which there is 180 N of tension at a given instant. Part A Determine the magnitude of the acceleration of the bucket. Express your answer to two...
-
Select the expression ( ( s ) ) with the correct syntax. Pick ONE OR MORE options 1 ) 1 ) DROP TABLE IF EXISTS users 2 ) 2 ) DELETE TABLE IF EXISTS users 3 ) 3 ) DROP TABLE users 4 ) 4 ) DESTROY...
-
According to a New York Times columnist, The estate tax affects a surprisingly small number of people. In 2003, . . . just 1.25 percent of all deaths resulted in taxable estates, with most of them...
-
Tiffany & Co. is one of the worlds premier jewelers and a designer of other fine gifts and housewares. Presented here are selected income statement and balance sheet amounts (dollars in thousands)....
-
A recent annual report for PepsiCo contained the following information for the period (dollars in millions): Net income ............ $6,462 Depreciation and amortization ..... 2,737 Increase in...
-
Foot Locker, Inc., is a large global retailer of athletic footwear and apparel selling directly to customers and through the Internet. It includes the Foot Locker family of stores, Champs Sports,...
-
Michael is in his last year of undergraduate studies in human services and economics and is conducting original research for his final research project. As part of his project, he is required to keep...
-
Keza is studying online for a masters degree in Management and wishes to undertake her research project in her home country, Rwanda, where she works as a civil servant. Due to her high pressure job,...
-
You wish to study the reasons why car owners join manufacturer-sponsored owners clubs. You choose to use a qualitative methodology and narrative inquiry research strategy involving unstructured...
Study smarter with the SolutionInn App