Reference no: EM13913032
Problem 1
Selected account balances of Fleming Manufacturing Company appear below for 2011:
Beginning of Year End of Year
Finished Goods Inventory 25,000 32,000
Work In Process Inventory 30,000 35,000
Raw Materials Inventory 46,000 26,000
Sales 360,000
Direct Labor 45,000
Factory Supervisory Salaries 18,000
Income Tax Expense 25,000
Factory Insurance 12,000
Raw Material Purchases 75,000
Administrative Expenses 17,000
Sales Returns and Allowances 15,000
Factory Depreciation 22,000
Indirect Labor 11,000
Selling Expenses 35,000
Instructions :
Using the above information for Fleming Manufacturing Company, answer the following questions. Support your answers with clearly identified computations.
1. What were the total overhead costs incurred
2. What was the amount of direct materials used in production
3. What was the cost of goods manufactured
4. What was the cost of goods sold
5. What was the amount of net income?
Problem 2
Embassy Company prepared the following income statement for 2011:
FINNEY COMPANY
Income Statement
For the Year Ended December 31, 2011
Sales (20,000 units) 500,000
Variable expenses 300,000
Fixed expenses 120,000
Net income 80,000
Instructions:
Answer the following independent questions and show computations to support your answers.
1. What is the company's Contribution Margin in total dollars
2. What is the company's CM per unit
3. What is the company's CM in %
4. What is the company's break-even point in units
5. How many more units would the company have had to sell to earn net income of $120,000 in 2011
6. If the company expects a 25% increase in sales volume in 2011, what would be the expected net income in 2012
7. How much sales dollars would the company have to generate in order to earn a target net income of $160,000 in 2012?
Problem 3
The Financial Statements of Gaines Company appear below:
Gaines Company
Comparative Balance Sheet
December 31,
2013
Assets
Cash $25,000
Short-term Investments 15,000
Accounts Receivable (net) 50,000
Inventory 50,000
Property, Plant and Equipment (net) 260,000
Total Assets $400,000
Liabilities and Stockholders' Equity
Accounts Payable $20,000
Short-term Notes Payable 30,000
Bonds Payable 90,000
Common Stock 150,000
Retained Earnings 110,000
Total Liabilities and Stockholders' Equity $400,000
Gaines Company
Income Statement
For the Year Ended December 31, 2013
Net Sales $400,000
Cost of Goods Sold 240,000
Gross Profit 160,000
Expenses
Operating Expenses 42,000
Interest Expense 18,000
Total Expenses 60,000
Income before Tax 100,000
Income tax expense 30,000
Net Income $70,000
Additional Information
a. Cash dividends of $23,000 were declared and paid in 2013.
b. Weighted average number of shares of common stock outstanding during 2013 was 30,000 shares.
c. Market value of common stock on December 31, 2013 was $21 per share.
Instructions:
Using the financial statements and additional information, compute the following ratios for Gaines Company for 2013. Show all computations.
1. Current Ratio
2. Return on Common Stockholders' equity
3. Price-earnings ratio
4. Acid-test ratio
5. Receivables turnover
6. Times Interest Earned
7. Profit Margin
8. Days in Inventory
9. Payout Ratio
10. Return on Assets