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Homework answers / question archive / 1)This discussion is designed to get you to see the behavior of costs in companies with which they are familiar
1)This discussion is designed to get you to see the behavior of costs in companies with which they are familiar. You should identify and describe the company. Then, identify three different costs that behave differently. You should identify at least one fixed cost, variable cost and mixed cost and be able to justify their selections.
Think of a company with which you are familiar. Describe the company and their primary product(s)/service(s). Identify a fixed cost, a variable cost, and a mixed cost that company would incur and explain how you determined that those costs would fit those behavior patterns.
2)From the following information of NaNo Company prepare a multi-step income statement For the Year Ended December 31, 2019 (2 marks)
Sales $137,460
Sales Returns $2,060
Sales Discounts $5,190
Cost of Goods Sold $62,990
Freight-Out $6,150
Advertising Expense $5,790
Sales Commissions Expense $3,470
Office Salaries Expense $18,510
Office Rent Expense $14,000
Office Supplies Expense $5,330
Gains on Sale Equipment $2,430
Loss on Sales of Investments $1,640
Interest Expense $930
1)Company - FMC (Fresenius Medical Care)
Primary Prduct - Haemodialysis Machines
Fixed Cost - Rental expense for their production facility.
Rental expense is a fixed contract for multiple years. The amount remains constant, it does not increase/decrease with the number of machines being manufactured.
Variable Costs - Per unit manufacturing cost of the Heamodialysis machines
HD machines production cost is variable. The more number of machines that the company produces, the more will be the total cost and vice-versa. It is increasing with increase in production, hence, the behavior is variable.
Mixed Cost - Insurance for the workers is mixed cost
The basic premium is fixed for the workers. In case of additions in the workforce, the premium keeps increasing. So, a part of it is fixed, the other part is variable based on the number of workers. The behaviour is mixed.
2)
Multi- Step income statement
| Sales | $137,460 | |
| Less: Sales discount | ($5,190) | |
| Sales return and Allowances | ($2,060) | |
| Freight out | ($6,150) | |
| Net sales | $124,060 | |
| Less: Cost of goods sold | ($62,990) | |
| Gross profit | $61,070 | |
| Expenses: | ||
| Selling expenses | ||
| Sales commission Expense | $3,470 | |
| Advertising expenses | $5,790 | |
| Total selling expenses | $9,260 | |
| General and administrative expenses | ||
| Office salaries expense | $18,510 | |
| Office rent Expense | $14,000 | |
| Office supplies expense | $5,330 | |
| Total general and administrative expenses | $37,840 | |
| Total expenses | $47,100 | |
| $13,970 | ||
| Other revenue, Gain, expenses and losses | ||
| Gain on sale of Equipment | $2,430 | |
| Loss on sale of investment | ($1,640) | |
| Interest expense | ($930) | |
| Total other revenue, gain, expenses and losses | ($140) | |
| Net income | $13,830 |
