The Boeing Company produces commercial aircraft. The following passage is taken from Management”s Discussion and Analysis, included in Boeing”s 2005 Annual Report. “Commercial aircraft production costs include a significant amount of infrastructure costs, a portion of which do not vary with production rates.” As part of its accounting practices, Boeing spreads the fixed infrastructure costs over the “accounting quantity” for each type of airplane. The […]

U sonic, Inc., has collected the following information on its cost of electricity: Machine Hours Total Electricity Costs January 625 $280 February 700 $290 March 500 $265 April 425 $200 May 450 $248 June 300 $170 July 375 $180 August 550 $240 September 575 $260 October 280 $150 November 430 $215 December 200 $100 Required Prepare a scatter graph of Usonic”s electricity costs for the […]

The following account balances are shown on November 30, 1999, for the Clever Bookstore: Cash $ 8,000 Accounts payable $ 4,000 Accounts receivable 9,000 Salaries payable 2,000 Inventory 60,000 Notes payable 35,000 Supplies 3,000 J. Clever, capital 39,000 Total $80,000 Total $80,000 The following transactions occurred during December. 1. Paid workers the $2,000 owed them on November 30. 2. Made sales totaling $40,000. One-half of […]

Restate the following income statement in contribution format. Sales ($100 per unit) $50,000 Less cost of goods sold ($60 per unit) 30,000 Gross margin 20,000 Less operating costs: Commissions ($6 per unit) $3,000 Salaries 8,000 Advertising 6,000 Shipping ($2 per unit) 1,000 18,000 Operating income $ 2,000

The following transactions all occurred on January 2 of the current year: 1. A company paid a $2,000 bill for a fire insurance policy that covers the current year and next year. 2. A company purchased for $200 a trash compactor that has an expected life of five years. 3. Two attorneys, working under a corporate structure, decide that a ski chalet at Vail is […]

Complete each of the following contribution format income statements by supplying the missing numbers. Sales revenue ? $450,000 ? $600,000 Variable costs 210,000 ? 96,000 ? Contribution margin 90,000 150,000 ? 400,000 Fixed costs ? 90,000 120,000 ? Operating income 15,000 ? ? ? Income taxes ? 18,000 16,000 55,000 Net income $10,500 ? $48,000 $165,000

On June 1, a sole proprietorship was formed to sell and service personal computers. During the first six months, the following transactions occurred: 1. On June 1, invested $50,000 in the business. 2. On July 1, purchased a four-wheel-drive pickup truck for $22,000 (on account) that will be used in the business. 3. On September 1, paid fuel and repairs costs of $1,750 for the […]

The Robinson Company sells sports decals that can be personalized with a player”s name, team name, and jersey number for $5 each. Robinson buys the decals from a supplier for $1.50 each and spends an additional $0.50 in variable operating costs per decal. The results of last month”s operations are as follows: Sales $10,000 Cost of goods sold 3,000 Gross profit 7,000 Operating costs 2,500 […]

Seaver & Co., a CPA firm, prepare their own financial statements with a December 31 year-end. 1. As of December 31, Seaver & Co. have rendered $20,500 worth of services to clients for which they have not yet billed the client, and for which they have not made any accounting entry. 2. Seaver & Co. owns equipment (computers, etc.) having an original cost of $12,000. […]

Mary Smith sells gourmet chocolate chip cookies. The results of her last month of operations are as follows: Sales revenue Cost of goods sold (all variable) 25,575 Gross margin Selling expenses (20% variable) 8,000 Administrative expenses (60% variable) 12,000 Operating income $ 4,425 Required Prepare a contribution format income statement for Mary. If Mary sells her cookies for $1.60 each, how many cookies did she […]