Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Vega Foods, Inc., has recently purchased a small mill that it intends to operate as one of its subsidiaries. The newly acquired mill has three products that it offers for sale-wheat cereal, pancake mix, and flour. Each product sells for $10 per package. Materials, labor, and other variable production costs are $4.90 per bag of wheat cereal, $6.10 per bag of pancake mix, and $3.10 per bag of flour. Sales commissions are 10% of sales for any product. All other costs are fixed.
The mill's income statement for the most recent month is given below:


Product Line
Total
Company Wheat
Cereal Pancake
Mix Flour
Sales $ 1,170,000 $ 390,000 $ 490,000 $ 290,000

Expenses:
Materials, labor, and other 579,900 191,100 298,900 89,900
Sales commissions 117,000 39,000 49,000 29,000
Advertising 156,050 73,000 50,000 33,050
Salaries 98,500 43,300 10,200 45,000
Equipment depreciation 58,500 19,500 24,500 14,500
Warehouse rent 23,400 7,800 9,800 5,800
General administration 84,000 28,000 28,000 28,000

Total expenses 1,117,350 401,700 470,400 245,250

Net operating income (loss) $ 52,650 $ (11,700) $ 19,600 $ 44,750


The following additional information is available about the company:


a.The same equipment is used to mill and package all three products. In the above income statement, equipment depreciation has been allocated on the basis of sales dollars. An analysis of equipment usage indicates that it is used 40% of the time to make wheat cereal, 50% of the time to make pancake mix, and 10% of the time to make flour.

b.All three products are stored in the same warehouse. In the above income statement, the warehouse rent has been allocated on the basis of sales dollars. The warehouse contains 46,800 square feet of space, of which 8,000 square feet are used for wheat cereal, 14,000 square feet are used for pancake mix, and 24,800 square feet are used for flour. The warehouse space costs the company $0.50 per square foot per month to rent.

c.The general administration costs relate to the administration of the company as a whole. In the above income statement, these costs have been divided equally among the three product lines.

d.All other costs are traceable to the product lines. Vega Foods' management is anxious to improve the mill's 4.50% margin on sales.

Required:
1.Prepare a new contribution format segmented income statement for the month. Adjust the allocation of equipment depreciation and warehouse rent as indicated by the additional information provided. (Input all amounts as positive values except losses which should be indicated by a minus sign. Round your final answers to the nearest dollar amount.)

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M940536

Have any Question? 


Related Questions in Accounting Basics

Data for the year-end adjustments for al geromes courier

Data for the year-end adjustments for Al Gerome's Courier Services are as follows: Insurance expired during the year ($950.00) Depreciation of Equipment for the year ($9,860.00) Salaries accrued at December 31 ($5100.00) ...

Accounting assignmentyour response should be 2-3 pages

Accounting Assignment YOUR RESPONSE SHOULD BE 2-3 PAGES COMPRISING BOTH RESEARCH CASES. Professional Research 1 Your client took accounting a number of years ago and was unaware of comprehensive income reporting. He is n ...

Kiona co set up a petty cash fund for payments of small

Kiona Co. set up a petty cash fund for payments of small amounts. The following transactions involving the petty cash fund occurred in May (the last month of the company's fiscal year). May 1 Prepared a company check for ...

Questiona not-for-profit organization receives a restricted

Question: A not-for-profit organization receives a restricted gift. When, and in which type of fund, should it recognize the revenue? When, and in which type of fund, should it recognize the related expense? What is the ...

Assignment business analyticsthis assignment requires you

Assignment Business Analytics This Assignment requires you to use Excel in all three questions. Make sure you explain your answers and provide the regression output tables for questions 1 and 2. Submit your Assignment to ...

Accounting and societyrequirementsbackgroundin their annual

Accounting and Society Requirements: Background: In their annual report, companies are required to include a remuneration report that documents the remuneration packages of the chief executive officer, other key executiv ...

Question 1the company you work for has a large amount of

Question 1 The company you work for has a large amount of disposable cash and very little debt on its books. The board of directors has expressed an interest in taking this money and investing in equity and debt securiti ...

Accounting paper assignment start-up budgetingfor this

Accounting Paper Assignment: Start-up Budgeting For this assignment, you will decide what type of budget to implement for a start-up company. Write a three to four page paper in which you: 1. Summarize the type of manufa ...

Assignmentpart 11 which of the following would cause a

Assignment Part 1 1. Which of the following would cause a contra-asset to be credited and an expense debited? a. Recording an accrued expense b. Recording the consumption of supplies c. Recording the building depreciatio ...

Writing assignment cash and receivablesassignment

Writing Assignment: Cash and Receivables Assignment Goals: - Obtain research experience in the Accounting Standards Codification - Obtain experience using SEC filings and the SEC website - Practice writing concise accoun ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro