Fanning Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) FANNING COMPANY Income Statements for Year 2 Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Revenue and Cost Items for Segment A Effect on income $ $ 169,000 (123,000) (20,000) 26,000 (37,000) (5,000) $ (16,000) $ 242,000 (92,000) (32,000) Required a. Prepare a schedule of relevant sales and costs for Segment A. b. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. 118,000 (35,000) (19,000) $ 64,000 $ 262,000 (89,000) (28,000) 145,000 (35,000) $ 110,000

Fanning Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) FANNING COMPANY Income Statements for Year 2 Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Revenue and Cost Items for Segment A Effect on income $ $ 169,000 (123,000) (20,000) 26,000 (37,000) (5,000) $ (16,000) $ 242,000 (92,000) (32,000) Required a. Prepare a schedule of relevant sales and costs for Segment A. b. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. 118,000 (35,000) (19,000) $ 64,000 $ 262,000 (89,000) (28,000) 145,000 (35,000) $ 110,000

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter13: Financial Statement Analysis

Section: Chapter Questions

Problem 13.3DC: Comparing Two Companies in the Same Industry: Chipotle and Panera Bread This case should be...

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Comparing Two Companies in the Same Industry: Chipotle and Panera Bread This case should be completed after responding to the requirements in Decision Case 13-2. Refer to the financial statement information of Chipotle and Panera Bread reprinted at the back of the book. Required Using the format in Example 13-5, prepare common-size comparative income statements for 2014 and 2013, for Panera Bread. Use total revenues as the base (i.e., 100%). Round all percentages to the nearest one-tenth of a percent. The common-size comparative income statements indicate the relative importance of items on the statement. Compare the common-size income statements of Panera Bread and Chipotle. What are the most important differences between the two companies income statements? Using the format in Example 13-4, prepare common-size comparative balance sheets at the end of 2014 and 2013, for Panera Bread. Round all percentages to the nearest one-tenth of a percent. The common-size comparative balance sheets indicate the relative importance of items on the statement. Compare the common-size balance sheets of Panera Bread and Chipotle. What are the most important differences between the two companies balance sheets?
Answer ALL the questions in this section. QUESTION 1 Read the information below and answer the following questions INFORMATION The following statement of comprehensive income for the financial year ended 31 December 2021 and the statement of financial position as at 31 December 2021 have been provided by Midas Enterprises: Statement of comprehensive income for the year ended 31 December 2021 1 Sales Cost of sales Gross profit Variable selling and administrative expenses Fixed selling and administrative expenses Net profit R 10 000 000 (5 750 000) 4 250 000 (1 500 000) (500 000) 2 250 000 Statement of financial position as at 31 December 2021 ASSETS Non-current assets Property, plant and equipment Current assets Inventories Accounts receivable Cash EQUITY AND LIABILITIES Equity Current liabilities Accounts payable R 800 000 800 000 3 400 000 1 600 000 600 000 1 200 000 4 200 000 3 760 000 440 000 440 000 4 200 000 Additional information: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. The sales budget…
Benson Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold Sales commissions BENSON COMPANY Income Statements for Year 2 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss). Complete this question by entering your answers in the tabs below. Required A Required B A $ 169,000 (130,000) (21,000) 18,000 (43,000) (5,000) $ (30,000) B $ 238,000 (81,000) (23,000) 134,000 (37,000) (14,000) $ 83,000 с $ 247,000 (83,000) (31,000) 133,000 (26,000) 0 Required a. Prepare a schedule of relevant sales and costs for Segment A. b. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. $ 107,000
Top executive officers of Tildon Company, a merchandising firm, are preparing the next year's budget. The controller has provided everyone with the current year's projected income statement. Current Year $1,600,000 1,120,000 480,000 190,000 Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income 290,000 Cost of goods sold is usually 70 percent of sales revenue, and selling and administrative expenses are usually 10 percent of sales plus a fixed cost of $30,000. The president has announced that the company's goal is to increase net income by 15 percent. Required The following items are independent of each other: a. Prepare a pro forma income statement. What percentage increase in sales would enable the company to reach its goal? b. The market may become stagnant next year, and the company does not expect an increase in sales revenue. The production manager believes that an improved production procedure can cut cost of goods sold by 2 percent. Prepare a…
VII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position For the years 2019 and 2018 Comparative Income Statement For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 160,000 185,000 Marketable Secuities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Inventory 100,000 80,000 Gross Profit 60,000 69,375 Total Current Assets 220,000 200,000 160,000 P445,000 P380,000 245,000 Operating Expenses: Fixed Assets Selling Expenses 22,000 25,000 Total…
VII. Direction: Compute and interpret. The following comparative financial statements are provided by Avatar Industries. You were asked to compute the different financial ratios and provide your interpretations with regards to profitability, efficiency, liquidity and solvency of the company. Use the Answer Sheet template below to input your answer and solution. AVATAR INDUSTRIES AVATAR INDUSTRIES Comparative Statement of Financial Position For the years 2019 and 2018 Comparative Income Statement For the years 2019 and 2018 2019 2018 2019 2018 ASSETS Current Assets: Sales P200,000 P210,000 Cash & Cash Equivalent P65,000 P70,000 Sales Returns and Allowances 40,000 25,000 Accounts Receivable 40,000 35,000 Net Sales 160,000 185,000 Marketable Securities 40,000 35,000 Cost of Goods Sold 100,000 115,625 Inventory 100,000 80,000 Gross Profit 60,000 69,375 Total Current Assets 245,000 220,000 Operating Expenses: Fixed Assets 200,000 160,000 Selling Expenses 22,000 25,000 Total Assets P445,000…
Complete this question by entering your answers in the tabs below. Analysis Analysis Bal Sheet Inc Stmt Prepare a vertical analysis of an income statements for Year 4 and Year 3. (Percentages may not add exactly due to rounding. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).) Revenues Sales (net) Other revenues Total revenues Expenses Cost of goods sold FANNING COMPANY Vertical Analysis of Income Statements Year 4 Selling, general, and administrative expense Interest expense Income tax expense Total expenses Net income Amount $ 231,900 9,300 241,200 118,800 54,200 6,800 22,800 202,600 $ 38,600 Percentage of Total Analysis Bal Sheet % % Year 3 Amount $ 211,200 6,400 217,600 102,100 49,100 6,000 21,800 179,000 $ Percentage of Total % % 38,600 Analysis Inc Stmt > Show less
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Income statements for Walton Company for Year 3 and Year 4 follow: WALTON COMPANY Income Statements. Sales Cost of goods sold. Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income Required A Required B Year 4 $200, 300 143,300 20,900 12,900 3,200 Required a. Perform a horizontal analysis, showing the percentage change in each income statement component between Year 3 and Year 4. b. Perform a vertical analysis, showing each income statement component as a percentage of sales for each year. Sales Cost of goods sold Selling expenses Administrative expenses Interest expense Total expenses Income before taxes Income taxes expense Net income $180,300 $160,300 20,000 20,000 3,300 5,600 $ 14,400 $ 16,700 Complete this question by entering your answers in the tabs below. Year 3 $180,300 X Answer is complete but not entirely correct. Perform a vertical analysis, showing each income statement component as a percentage of…
Vincenzo Corporation is a manufacturer with four product lines. Below is some financial information about each of the four product lines. Required:Calculate, explain, and determine which of the segments are reportable based on the:a. Revenue testb. Operating profit (loss) testc. Identifiable assets testd. 75 percent combined revenue test
Required information [The following information applies to the questions displayed below] The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning inventory Apr, 1 Oct. 1 Purchased Purchased 400 units # $17 2,900 units # $22 1,200 units # $23 During Year 3, Parvin sold 3,825 units of inventory at $43 per unit and incurred $18,30% of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. Parvin started the period with cash of $148,700, inventory of $6,800, common stock of $131,000, and retained earnings of $24,500.
Game-On Sports operates in two distinct segments: athletic equipment and accessories. The income statement for each operating segment is presented below.Required:1. Complete the "%" columns to be used in a vertical analysis of Game-On Sports’ two operating segments. Express each amount as a percentage of sales. (Round your percentage answers to 1 decimal place.) GAME-ON SPORTS Income Statement For the Year Ended December 31, 2021 Athletic Equipment Accessories Amount % Amount % Net sales $2,800,000 $3,250,000 Cost of goods sold 1,250,000 1,620,000 Gross profit 1,550,000 1,630,000 Operating expenses 650,000 700,000 Operating income 900,000 930,000 Other income (expense) 75,000 (10,000) Income before tax 975,000 920,000 Income tax expense 225,000 200,000 Net income $750,000 $720,000 2. Use vertical analysis to compare the profitability of the two operating segments. Which segment is more…