The following income statement was drawn from the records of Vernon Company, a merchandising firm: VERNON...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following income statement was drawn from the records of Vernon Company, a merchandising firm: VERNON COMPANY Income Statement Sales revenue (4,500 units For the Year Ended December 31, Year 1 $168) Cost of goods sold (4,500 units $84) Gross margin $ 756,000 (378,000) 378,000 (37,800) Sales commissions (5% of sales) Administrative salaries expense (90,000) Advertising expense (37,000) Depreciation expense Shipping and handling expenses (4,500 units $3) (48,000) (13,500) Net income $ 151,700 Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Vernon will earn if sales increase by 20 percent. 25 Req A Req B and C Reconstruct the income statement using the contribution margin format. VERNON COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Less: Fixed costs $ 0 0 Complete this question by entering your answers in the taps DEIOW. Req A Req B and C Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Vernon will earn if sales increase by 20 percent. (Round your intermediate calculations and "Operating leverage" answer to 2 decimal places. Round the "Net income" value to nearest whole dollar.) b. Operating leverage C. Net income < Req A The following income statement was drawn from the records of Vernon Company, a merchandising firm: VERNON COMPANY Income Statement Sales revenue (4,500 units For the Year Ended December 31, Year 1 $168) Cost of goods sold (4,500 units $84) Gross margin $ 756,000 (378,000) 378,000 (37,800) Sales commissions (5% of sales) Administrative salaries expense (90,000) Advertising expense (37,000) Depreciation expense Shipping and handling expenses (4,500 units $3) (48,000) (13,500) Net income $ 151,700 Required a. Reconstruct the income statement using the contribution margin format. b. Calculate the magnitude of operating leverage. c. Use the measure of operating leverage to determine the amount of net income Vernon will earn if sales increase by 20 percent. 25 Req A Req B and C Reconstruct the income statement using the contribution margin format. VERNON COMPANY Income Statement For the Year Ended December 31, Year 1 Less: Variable costs Less: Fixed costs $ 0 0 Complete this question by entering your answers in the taps DEIOW. Req A Req B and C Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Vernon will earn if sales increase by 20 percent. (Round your intermediate calculations and "Operating leverage" answer to 2 decimal places. Round the "Net income" value to nearest whole dollar.) b. Operating leverage C. Net income < Req A
Expert Answer:
Answer rating: 100% (QA)
Solution Required a Sales revenue 756000 Less Variable cost Cost of goods sold 378000 Sales com... View the full answer
Related Book For
Fundamental Managerial Accounting Concepts
ISBN: 978-0078025655
7th edition
Authors: Thomas Edmonds, Christopher Edmonds, Bor Yi Tsay, Philip Old
Posted Date:
Students also viewed these accounting questions
-
The following income statement was drawn from the records of Butler Company, a merchandising firm: BUTLER COMPANY Income Statement For the Year Ended December 31, 2014 Sales revenue (2,000 units 3...
-
The following income statement was drawn from the records of Ulrich Company, a merchandising firm: .:. Required a. Reconstruct the income statement using the contribution margin format. b. Calculate...
-
The following income statement was drawn from the records of Joel Company, a merchandising firm: JOEL COMPANY Income Statement For the Year Ended December 31, 2018 Sales revenue (2,000 units ...
-
Write a function my_ieee_2_dec(ieee), where icce is a string contains 64 char- acters of ones and zeros representing a 64-bit IEEE754 number. The output should be d, the equivalent decimal...
-
Distinguish between the two subsections of Section 404 of the Sarbanes-Oxley Act of 2002.
-
The Arctic Sea ice extent, the area of the sea covered by ice, grows seasonally over the winter months each year, typically from November to March, and is modeled by G(t), in millions of square...
-
Name three industry sectors where prescriptive analytics are being used to add value.
-
Melissa Adduci has prepared the following list of statements about depreciation. 1. Depreciation is a process of asset valuation, not cost allocation. 2. Depreciation provides for the proper matching...
-
For the following exercise, find f(z) for the function. Answer with exact values only. f(x)=-5x-4
-
Go Times Inc. has current sales of $7,500 (in millions), an operating ratio of 6%, a capital requirement ratio of 40%, a tax rate of 40% and a corporate cost of capital of 8%. Under new management...
-
Discuss a competency for a position, and describe some of the indicators used to determine if the competency is present. There should be five indicators.
-
10) Looking at the free body diagram on the right. It is showing a snow sled with a rocket attache that supplies a thrust force of 80 N. The sled has a mass of 5 kg. The coefficient of kinetic...
-
In this post, let's explore some of the health data in the World Health Organization (WHO) Website. Go to the following website:https://www.who.int/countries/ Links to an external site. Choose a...
-
How am I getting cannot find symbol error at line Hashes hashes = new Hashes(); Main.java package class; import java.io.BufferedReader; import java.io.FileNotFoundException; import...
-
What security measures would you implement to protect sensitive data within a software application? How would you ensure that these measures are compliant with industry standards and regulations?
-
Show a reasonable comprehension of conservative application improvement and use of direction programming instruments and progress conditions considering a prerequisites report. 2. Make sense of...
-
How do i answer these retrosynthesis question, showing the synthons, etc. I understand that 1 ) can be performed using Gabriel Amine synthesis ( which i was taught ) , but how do i show it ? What...
-
(a) Find the equation of the tangent line to f(x) = x 3 at the point where x = 2. (b) Graph the tangent line and the function on the same axes. If the tangent line is used to estimate values of the...
-
Hall Corporation reported the following operating results for two consecutive years. Required a. Compute the percentage changes in Hall Corporations income statement components between the two years....
-
The following graph setups depict the dollar amount of variable cost on the vertical axes and the level of activity on the horizontal axes: Required a. Draw a line that depicts the relationship...
-
Milton Company manufactures and sells its own brand of digital cameras. It sells each camera for $200. The companys accountant prepared the following data: Manufacturing costs Variable ...............
-
Is the word anxiety a candidate for creating a stable pattern? If so, give reasons.
-
Define the real meaning of anxiety. What are the different meanings of this word?
-
Do you agree to the suggestion that anxiety pattern is applicable to all domains where it plays a major role?
Study smarter with the SolutionInn App