Principles of Accounting
12th Edition
ISBN: 9781133626985
Author: Belverd E. Needles, Marian Powers, Susan V. Crosson
Publisher: Cengage Learning
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Question
Chapter 6, Problem 5C
To determine
Calculate inventories as a percentage of the cost of sales, identify the company that is having the highest prices in relation to costs of sales, identify the company that is more capable in its operating expenses, find out the company manages its inventories better and find out the company that is more profitable.
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The following income statement was drawn from the records of Munoz, a merchandising firm:
MUNOZ COMPANY
Income Statement
For the Year Ended December 31
Sales revenue (6,500 units x $164)
Cost of goods sold (6,500 units x $82)
Gross margin
Sales commissions (5% of sales)
Administrative salaries expense
Advertising expense
Depreciation expense
Shipping and handling expenses (6,500 units x $3)
$1,066,000
(533,000)
533,000
(53,300)
(83,000)
(33,000)
(41,000)
(19,500)
$ 303,200
Net income
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 Munoz will earn if sales increase by 10 percent.
Complete this question by entering your answers in the tabs below.
Req A
Req B and C
Reconstruct the income statement using the contribution margin format.
MUNOZ COMPANY
Income Statement
For the Year Ended December 31
Less: Variable costs
Less: Fixed…
The following income statement was drawn from the records of Munoz, a merchandising firm:
MUNOZ COMPANY
Income Statement
For the Year Ended December 31
Sales revenue (6,500 units x $164)
Cost of goods sold (6,500 units x $82)
Gross margin
Sales commissions (5% of sales)
Administrative salaries expense
Advertising expense
Depreciation expense
Shipping and handling expenses (6,500 units x $3)
$1,066,000
(533,000)
533,000
(53,300)
(83,000)
(33,000)
(41,000)
(19,500)
8:02
Net income
$303,200
nt
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 incoome Munoz will earn if sales increase by 10 percent.
int
Complete this question by entering your answers in the tabs below.
Req A
Req B and C
Reconstruct the income statement using the contribution margin format.
MUNOZ COMPANY
Income Statement
For the Year Ended December 31
Less: Variable costs…
The general merchandise retail industry has a number of segments represented by the following companies:
For a recent year, the following cost of goods sold and beginning and ending inventories arc provided from corporate annual reports (in millions) for these three companies:
a. Determine the inventory turnover ratio for all three companies. Round all calculations to one decimal place.b. Determine the number of days' sales in inventory for all three companies. Use 365 days and round all calculations to one decimal place.
c.Interpret these results based on each company's merchandising concept.
Chapter 6 Solutions
Principles of Accounting
Ch. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Assume a large shipment of uninsured merchandise...Ch. 6 - Prob. 5DQCh. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Indicate whether each of the statements that...Ch. 6 - Prob. 2SECh. 6 - Prob. 3SE
Ch. 6 - Prob. 4SECh. 6 - Prob. 5SECh. 6 - Prob. 6SECh. 6 - Prob. 7SECh. 6 - Prob. 8SECh. 6 - Record the following transactions using T...Ch. 6 - Prob. 10SECh. 6 - Prob. 11SECh. 6 - Sutton Hills Companys management made the...Ch. 6 - Prob. 2EACh. 6 - A company has the following data: net sales,...Ch. 6 - Prob. 4EACh. 6 - Prob. 5EACh. 6 - Linear Company engaged in the following...Ch. 6 - Prob. 7EACh. 6 - Prob. 8EACh. 6 - Prob. 9EACh. 6 - Prob. 10EACh. 6 - Prob. 11EACh. 6 - Prob. 12EACh. 6 - Prob. 13EACh. 6 - Prob. 14EACh. 6 - Prob. 15EACh. 6 - Matuska Tools Corporations income statements...Ch. 6 - Selected accounts from Murrays Furniture Stores...Ch. 6 - Prob. 3PCh. 6 - Selected accounts from Dences Gourmet Shops...Ch. 6 - Prob. 5PCh. 6 - Teague Company engaged in the following...Ch. 6 - Prob. 7APCh. 6 - Prob. 8APCh. 6 - Prob. 9APCh. 6 - Prob. 10APCh. 6 - Prob. 11APCh. 6 - Prob. 12APCh. 6 - Prob. 1CCh. 6 - Prob. 2CCh. 6 - Prob. 3CCh. 6 - Prob. 4CCh. 6 - Prob. 5CCh. 6 - Prob. 6C
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