Question 1 1. The following is Addison Corporation’s contribution format income statement for last month: Sales $1‚000‚000 Less: Variable Expenses $ 700‚000 Contribution Margin $ 300‚000 Less: Fixed Expenses $ 180‚000 Operating Income $ 120‚000 The company has no beginning or ending inventories. A total of 20‚000 units were produced and sold last month. What is the company’s margin of safety in dollars? $400 000 10
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The balance sheet approach’s main goal is to properly value assets and liabilities. The assets are most commonly valued by the amount of money they can receive by selling that asset for or how much they spent for the asset. The determination of the accounting method depends on the nature of the underlying item and how the firm intends to use it. Earnings is a function of the change in net assets. The income statement approach’s main goal‚ on the other hand‚ is to determine revenues‚ expenses‚ and
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Explain the main differences between absolute and relative morality (25 marks). Absolute morality is morality with fixed rules. An absolutist argues that moral actions are right or wrong in themselves – regardless of circumstances‚ cultures or intention. They believe in ethical absolutes – rigid moral rules true for all time in all places and situations; they are facts – morality is objective. Most absolutists follow a set of rules that they view as universal truth – a religious person may see their
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recoup our costs and achieve a target return on investment?” 12-6 A target cost per unit is the estimated long-run cost per unit of a product (or service) that‚ when sold at the target price‚ enables the company to achieve the targeted operating income per unit. 12-7 Value engineering is a systematic evaluation of all aspects of the value-chain business functions‚ with the objective of reducing costs while satisfying customer needs. Value engineering via improvement in product and process designs
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4-1 4 Income Statement Usefulness Predicting future performance. 4-2 Evaluate past performance. Help assess the risk or uncertainty of achieving future cash flows. Income Statement Limitations Companies omit items that cannot be measured reliably. 4-3 Income is affected by the accounting methods employed. Income measurement involves judgment. Income Statement Quality of Earnings Companies have incentives to manage income to meet or
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Chapter 2 Questions 2-1. I agree with this statement. I would also like to add that cost behavior is also identifying the key resources that are performed‚ resources used in performing these activities‚ costs of the resources‚ and what the cost is driven from. 2-2. Two rules of thumb when analyzing cost behavior are to manage what the company manufactures‚ sells‚ and to give advice as to where costs can be reduced. 2-3. Three examples of a variable cost are a 12% increase in the production of
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in variable costs on a company ’s profitability. C. changes in fixed costs on a company ’s profitability. D. changes in product sales mix on a company ’s profitability. E. All of these. 2. The break-even point is that level of activity where: A. total revenue equals total cost. B. variable cost equals fixed cost. C. total contribution margin equals the sum of variable cost plus fixed cost. D. sales revenue equals total variable cost. E. profit is greater than zero. 3. The unit contribution margin
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Income statement The income statement or the profit and loss account as it is also called measures reports how much profit (wealth) has the business generated over a period of time. To measure profit the total generated revenue over a period must be identified. Revenue is a measure of inflow of economic benefits arising from the operations of the business. These benefits will either result in an increase of assets such as cash or amounts owed to the business by the customers or a decrease
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CASH FLOW DIRECT/INDIRECT 1. Given the following information and using the indirect method prepare the Cash Flows from Operating Activities section of the statement of cash flows. End of Year Beginning of Year Change Cash 23‚500 37‚400 (13‚900) Accounts receivable (net)
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Explain the main differences between Act and Rule Utilitarianism Utilitarianism is a theory‚ which first became widely acknowledge when it was adopted by its greatest advocate Jeremy Bentham. It is a theory that maintains that it is an action’s total consequence that determines its moral correctness. It is a theory not concerned with the effects of the action on the individual carrying out the action‚ but instead the effect it has on everybody affected by the action. It also maintains that it is
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