FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
Bartleby Related Questions Icon

Related questions

Question
i need the answer quickly
Gibson Corporation has three divisions, each operating as a responsibility center. To provide an incentive for
divisional executive officers, the company gives divisional management a bonus equal to 15 percent of the excess
of actual net income over budgeted net income. The following is Atlantic Division's current year's performance
Sales revenue
Cost of goods sold
Gross profit
selling & administrative expenses
Net incone
Current Year
$ 4,820,000
2,460,000
1,560,000
730,000
$830,000
The president has just received next year's budget proposal from the vice president in charge of Atlantic Division.
The proposal budgets a 7 percent increase in sales revenue with an extensive explanation about stiff market
competition. The president is puzzled. Atlantic has enjoyed revenue growth of around 12 percent for each of the
past five years. The president had consistently approved the division's budget proposals based on 7 percent
growth in the past. This time, the president wants to show that he is not a fool. "I will impose a 17 percent revenue
increase to teach them a lesson!" the president says to himself smugly.
Assume that cost of goods sold and selling and administrative expenses remain stable in proportion to sales.
Required
a. Prepare the budgeted income statement based on Atlantic Division's proposal of a 7 percent increase.
b-1. Prepare an income statement with 12 percent growth.
b-2. if growth is actually 12 percent as usual, how much bonus would Atlantic Division's executive officers receive if
the president had approved the division's proposal?
c. Prepare the budgeted income statement based on the 17 percent increase the president imposed
d, if the actual results turn out to be a 12 percent increase as usual, how much bonus would Atlantic Division's
executive officers receive since the president imposed a 17 percent increase?
Complete this question by entering your answers in the tabs below.
Rec A
Req 01
Req 82
Req C and D
Prepare the budgeted income statement based on Atlantic Division's proposal of a 7 percent increase.
Sales revenue
GIBSON CORPORATION
Budgeted Income Statement
Cost of goods sold
Gross profit
Seling & administrative expenses
Net income
$
Req B1>
expand button
Transcribed Image Text:Gibson Corporation has three divisions, each operating as a responsibility center. To provide an incentive for divisional executive officers, the company gives divisional management a bonus equal to 15 percent of the excess of actual net income over budgeted net income. The following is Atlantic Division's current year's performance Sales revenue Cost of goods sold Gross profit selling & administrative expenses Net incone Current Year $ 4,820,000 2,460,000 1,560,000 730,000 $830,000 The president has just received next year's budget proposal from the vice president in charge of Atlantic Division. The proposal budgets a 7 percent increase in sales revenue with an extensive explanation about stiff market competition. The president is puzzled. Atlantic has enjoyed revenue growth of around 12 percent for each of the past five years. The president had consistently approved the division's budget proposals based on 7 percent growth in the past. This time, the president wants to show that he is not a fool. "I will impose a 17 percent revenue increase to teach them a lesson!" the president says to himself smugly. Assume that cost of goods sold and selling and administrative expenses remain stable in proportion to sales. Required a. Prepare the budgeted income statement based on Atlantic Division's proposal of a 7 percent increase. b-1. Prepare an income statement with 12 percent growth. b-2. if growth is actually 12 percent as usual, how much bonus would Atlantic Division's executive officers receive if the president had approved the division's proposal? c. Prepare the budgeted income statement based on the 17 percent increase the president imposed d, if the actual results turn out to be a 12 percent increase as usual, how much bonus would Atlantic Division's executive officers receive since the president imposed a 17 percent increase? Complete this question by entering your answers in the tabs below. Rec A Req 01 Req 82 Req C and D Prepare the budgeted income statement based on Atlantic Division's proposal of a 7 percent increase. Sales revenue GIBSON CORPORATION Budgeted Income Statement Cost of goods sold Gross profit Seling & administrative expenses Net income $ Req B1>
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education