Colt Industries had sales in 2008 of $6,400,000 and gross profit of $1,100,000

ACC 560 Week 6 Assignment

P9-3A Colt Industries had sales in 2008 of $6,400,000 and gross profit of $1,100,000. Management is considering two alternative budget plans to increase its gross profit in 2009.

Plan A would increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 5% from its 2008 level. Plan B would decrease the selling price per unit by $0.50.The marketing department expects that the sales volume would increase by 150,000 units.

At the end of 2008, Colt has 40,000 units of inventory on hand. If Plan A is accepted, the 2009 ending inventory should be equal to 5% of the 2009 sales. If Plan B is accepted, the ending inventory should be equal to 50,000 units. Each unit produced will cost $1.80 in direct labor, $1.25 in direct materials, and $1.20 in variable overhead. The fixed overhead for 2009 should be $1,895,000.

Instructions
a) Prepare a sales budget for 2009 under each plan
b)Prepare a production budget for 2009 under each plan
c) Compute the production cost per unit under each plan. Why is the cost per unit different for each of the two plans? (Round to two decimals)
d) Which plan should be accepted (Hint: Compute the gross profit under each plan)

Click here for the solution: Colt Industries had sales in 2008 of $6,400,000 and gross profit of $1,100,000

Fisafolia Corporation has gross income from operations of $220,000 and operating expenses of $160,000 for 2010

Fisafolia Corporation has gross income from operations of $220,000 and operating expenses of $160,000 for 2010. The corporation also has $20,000 in dividends from publicly traded domestic corporations (ownership in all corporations was less than 20 percent).
a. Calculate the corporation's dividends received deduction for 2010.
b. Assume that instead of $220,000, Fisafolia Corporation has gross income from operations of $135,000. Calculate the corporation's dividends received deduction for 2010.


Click here for the solution: Fisafolia Corporation has gross income from operations of $220,000 and operating expenses of $160,000 for 2010

Journalize the following transactions for Wilson Company using the gross method of accounting for purchase discounts

Journalize the following transactions for Wilson Company using the gross method of accounting for purchase discounts. Assume a perpetual inventory system.

June 2 Purchased goods from Peterson Company on account, $13,600, terms 3/10, n/30.
June 8 Returned merchandise to Peterson Company that was previously purchased on account, $3,400.
June 12 Paid the amount due to Peterson Company.


Click here for the solution: Journalize the following transactions for Wilson Company using the gross method of accounting for purchase discounts

Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes

E9-12 (Gross Profit Method) Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes. Presented below is information for the month of May.

Inventory, May 1 $ 160,000
Purchases (gross) 640,000
Freight-in 30,000
Sales 1,000,000
Sales returns 70,000
Purchase discounts 12,000

Instructions
(a) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of sales.
(b) Compute the estimated inventory at May 31, assuming that the gross profit is 25% of cost.

Click here for the solution: Astaire Company uses the gross profit method to estimate inventory for monthly reporting purposes

Don Walls's gross earnings for the week were $1,780, his federal income tax withholding was $301.63, and his FICA total was $135.73

E10-5 Don Walls's gross earnings for the week were $1,780, his federal income tax withholding was $301.63, and his FICA total was $135.73.

Instructions:
a. What was Walls's net pay for the week?
b. Journalize the entry for the recording of his pay in the general journal. (Note: Use Salaries Payable; not Cash.)
c. Record the issuing of the check for Walls's pay in the general journal.

Click here for the solution: Don Walls's gross earnings for the week were $1,780, his federal income tax withholding was $301.63, and his FICA total was $135.73

Thorup Company had gross wages of $200,000 during the week ended December 10

Thorup Company had gross wages of $200,000 during the week ended December 10. The amount of wages subject to social security tax was $180,000, while the amount of wages subject to federal and state unemployment taxes was $25,000. Tax rates are as follows:

Social Security 6.0%
Medicare 1.5%
State unemployment 5.3%
Federal unemployment 0.8%

The total amount withheld from employee wages for federal taxes was $40,000.

a. Journalize the entry to record the payroll for the week of December 10.
b. Journalize the entry to record the payroll tax expense incurred for the week of December 10.

Click here for the solution: Thorup Company had gross wages of $200,000 during the week ended December 10