FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Transcribed Image Text:The GAAP income statement for Pace Company for the year ended December 31, 2022, shows sales
$900,000, cost of goods sold $600,000, and operating expenses $200,000. Assuming all costs and
expenses are 70% variable and 30% fixed, prepare a CVP income statement through contribution margin.
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- Last year’s contribution format income statement for Huerra Company is given below: Total Unit Sales $ 1,002,000 $ 50.10 Variable expenses 601,200 30.06 Contribution margin 400,800 20.04 Fixed expenses 316,800 15.84 Net operating income 84,000 4.20 Income taxes @ 40% 33,600 1.68 Net income $ 50,400 $ 2.52 The company had average operating assets of $491,000 during the year. Required: Compute last year’s margin, turnover, and return on investment (ROI). For each of the following questions, indicate whether last year’s margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI. Consider each question separately. Using Lean Production, the company is able to reduce the average level of inventory by $100,000. The company achieves a cost savings of $10,000 per year by using less costly materials. The company purchases machinery and equipment that increase average operating assets by $125,000.…arrow_forwardplease show the steps to calculate the DOL, DFL and DCL. please write out the stepsarrow_forwardPrepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $1,425,000.arrow_forward
- Subject - account Please help me. Thankyou.arrow_forwardEngberg Company installs lawn sod in home yards. The company's most recent monthly.contribution format Income statement follows: Percent of Sales 100% Sales Variable expenses Contribution margin Fixed expenses Net operating income Amount $ 92,000 36,800 55,200. 44,160 $ 11,040 40% 60% Required: 1. What is the company's degree of operating leverage? 2. Using the degree of operating leverage, estimate the impact on net operating income of a 7% increase in unit sales. 3. Construct a new contribution format income statement for the company assuming a 7% increase in unit sales. Answer is not complete. Complete this question by entering your answers in the tabs below. increases Required 1 Required 2 Required 3 Using the degree of operating leverage, estimate the impact on net operating income of a 7% increase in unit sales. (Round your intermediate calculations to 2 decimal places. Round your percentage answer to 2 decimal places (.e.1234 should be entered as 12.34).) Net operating income.…arrow_forwardSarratt Corporation's contribution margin ratio is 70% and its fixed monthly expenses are $38,000. Assume that the company's sales for May are expected to be $97,000. Required: Estimate the company's net operating income for May, assuming that the fixed monthly expenses do not change. Net operating incomearrow_forward
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