Assume that you are interested in identifying reasons for the changes in selling and administrative expenses...
Assume that you are interested in identifying reasons for the changes in selling and administrative expenses and income tax expense. Explain where you would look to find additional information about the change
Homework Answers
| reasons for the changes in | ||
| Selling Expenses | Administrative Expenses | Income tax expenses |
| Distribution costs such as logistics, shipping and insurance costs | Change in Salaries of senior executives and costs associated with general services such as accounting and information technology (IT) are examples of administrative expenses. | Change in income tax rate |
| Marketing costs such as advertising, website maintenance and spending on social media | Change in Building rent, insurance, subscriptions, utilities, and office supplies | Change in profit % |
| Selling costs such as wages, commissions and out-of-pocket expenses | Change in allowed and disallowed items | |
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Assume that you are interested in identifying reasons for the
changes in selling and administrative expenses...
Sales revenue Cost of goods sold Gross profit Selling and administrative expenses Operating income Interest expense...
Sales revenue Cost of goods sold Gross profit Selling and administrative expenses Operating income Interest expense Income before tax Income tax expense Net income 2018 R 70,000 42,000 R 28,000 20,000 R8,000 2,000 R6,000 2,000 R 4,000 2017 R 60,000 30,000 R 30,000 14,000 R16,000 2,000 R14,000 3,000 R11,000 Required: 1. Prepare common-size comparative income statements for the two years for Beach Motors (Pty) Ltd (11) 2. What observations can you make about the common-size statements? List at least four...
Question 1 [30 marks] Income statements for Beach Motors (Pty) Ltd. for the past two years...
Question 1 [30 marks] Income statements for Beach Motors (Pty) Ltd. for the past two years are as follows: (amounts in thousands of Rands) 2018 2017 Sales revenue R 70,000 R 60,000 Cost of goods sold 42,000 30,000 Gross profit R 28,000 R 30,000 Selling and administrative expenses 20,000 14,000 Operating income R 8,000 R16,000 Interest expense 2,000 2,000 Income before tax R6,000 R14,000 Income tax expense 2,000 3,000 Net income R4,000 R11,000 Required: 1. Prepare common-size comparative income statements...
Question 1 [30 marks] Income statements for Beach Motors (Pty) Ltd. for the past two years...
Question 1 [30 marks] Income statements for Beach Motors (Pty) Ltd. for the past two years are as follows: (amounts in thousands of Rands) 2017 2018 Sales revenue R 70,000 R 60,000 Cost of goods sold 42,000 30,000 Gross profit R 28,000 R 30,000 Selling and administrative expenses 20,000 14,000 Operating income R 8,000 R16,000 Interest expense 2,000 2,000 Income before tax R 6,000 R14,000 Income tax expense 2,000 3,000 Net income R 4,000 R11,000 Required: 1. Prepare...
Question 1 30 marks) Income statements for Beach Motors (Pty) Ltd. for the past two years are as follows: (amounts...
Question 1 30 marks) Income statements for Beach Motors (Pty) Ltd. for the past two years are as follows: (amounts in thousands of Rands) 2018 2017 Sales revenue R 70.000 R 60.000 Cost of goods sold 42,000 30.000 Gross profit R 28,000 R 30.000 Selling and administrative expenses 20,000 14.000 Operating income R8,000 R16,000 Interest expense 2,000 2.000 Income before tax R6,000 R14,000 Income tax expense 2,000 3,000 Net income R 4,000 R11,000 Required: 1. Prepare common-size comparative income statements...
variable selling and ausura Live expenses 32 pa unit) Fixed selling and administrative expenses Total selling...
variable selling and ausura Live expenses 32 pa unit) Fixed selling and administrative expenses Total selling and administrative expenses $ 46,000 $ 86,000 245,000 245,000 $291,000 $331,000 2. Prepare a table as in Exhibit 19.12 to convert variable costing income to absorption costing income for both 201 amounts should be entered with a minus sign.) 2019 DOWELL COMPANY Reconciliation of Variable Costing Income to Absorption Costing Income 2018 Variable costing income (loss) Add: Fixed overhead in ending inventory 100,000 Less:...
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising...
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising and Promotion Expenses Salaries and Wages Expense Income Tax Expense Interest Expense $1,050, 600 247,900 4,885,600 552,650 2,525,000 166,650 114,050 Required: Prepare the annual income statement for Kvass, Inc. KVASS, INC. Income Statement For the Year Ended December 31. Year Revenues Sales Revenue Total Revenues Expenses 0 KVASS, INC. Income Statement For the Year Ended December 31, Year 3 Revenues: Sales Revenue / Total...
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising...
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising and Promotion Expenses Salaries and Wages Expense Income Tax Expense Interest Expense $1,651,000 248,300 4,886,000 552,850 2,525,800 166,850 114,250 Required: Prepare the annual income statement for Kvass, Inc. KVASS, INC. Income Statement For the Year Ended December 31, Year 3 Revenues: Total Revenues Expenses: Total Expenses
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising...
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising and Promotion Expenses Salaries and Wages Expense Income Tax Expense Interest Expense $1,050,480 247,700 4,885,400 552,550 2,524,600 166,550 113,950 Required: Prepare the annual income statement for Kvass, Inc. KVASS, INC. Income Statement For the Year Ended December 31, Year 3 Revenues Total Revenues Expenses Total Expenses
Sales (500,000 units) Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total...
Sales (500,000 units) Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses Net income $7,500.888 1,000,000 2,000,000 see,eee 750.800 1,285.cee 5.535.000 $1,965,000 The company has an opportunity to sell 50,000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same for the additional units as they are for the regular units. However, the additional volume would...
Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past...
Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year. The company had depreciation expense and an increase in prepaid expenses associated with the selling and administrative expenses for the year. Assuming use of the direct method, how would these items be handled in converting the accrual-based selling and administrative expenses to a cash basis? Deducted from depreciation; deducted from expenses Added to depreciation; added to expenses Deducted from depreciation; added to expenses...
Sales revenue Cost of goods sold Gross profit Selling and administrative expenses Operating income Interest expense Income before tax Income tax expense Net income 2018 R 70,000 42,000 R 28,000 20,000 R8,000 2,000 R6,000 2,000 R 4,000 2017 R 60,000 30,000 R 30,000 14,000 R16,000 2,000 R14,000 3,000 R11,000 Required: 1. Prepare common-size comparative income statements for the two years for Beach Motors (Pty) Ltd (11) 2. What observations can you make about the common-size statements? List at least four...
Question 1 [30 marks] Income statements for Beach Motors (Pty) Ltd. for the past two years are as follows: (amounts in thousands of Rands) 2018 2017 Sales revenue R 70,000 R 60,000 Cost of goods sold 42,000 30,000 Gross profit R 28,000 R 30,000 Selling and administrative expenses 20,000 14,000 Operating income R 8,000 R16,000 Interest expense 2,000 2,000 Income before tax R6,000 R14,000 Income tax expense 2,000 3,000 Net income R4,000 R11,000 Required: 1. Prepare common-size comparative income statements...
Question 1 30 marks) Income statements for Beach Motors (Pty) Ltd. for the past two years are as follows: (amounts in thousands of Rands) 2018 2017 Sales revenue R 70.000 R 60.000 Cost of goods sold 42,000 30.000 Gross profit R 28,000 R 30.000 Selling and administrative expenses 20,000 14.000 Operating income R8,000 R16,000 Interest expense 2,000 2.000 Income before tax R6,000 R14,000 Income tax expense 2,000 3,000 Net income R 4,000 R11,000 Required: 1. Prepare common-size comparative income statements...
variable selling and ausura Live expenses 32 pa unit) Fixed selling and administrative expenses Total selling and administrative expenses $ 46,000 $ 86,000 245,000 245,000 $291,000 $331,000 2. Prepare a table as in Exhibit 19.12 to convert variable costing income to absorption costing income for both 201 amounts should be entered with a minus sign.) 2019 DOWELL COMPANY Reconciliation of Variable Costing Income to Absorption Costing Income 2018 Variable costing income (loss) Add: Fixed overhead in ending inventory 100,000 Less:...
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising and Promotion Expenses Salaries and Wages Expense Income Tax Expense Interest Expense $1,050, 600 247,900 4,885,600 552,650 2,525,000 166,650 114,050 Required: Prepare the annual income statement for Kvass, Inc. KVASS, INC. Income Statement For the Year Ended December 31. Year Revenues Sales Revenue Total Revenues Expenses 0 KVASS, INC. Income Statement For the Year Ended December 31, Year 3 Revenues: Sales Revenue / Total...
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising and Promotion Expenses Salaries and Wages Expense Income Tax Expense Interest Expense $1,651,000 248,300 4,886,000 552,850 2,525,800 166,850 114,250 Required: Prepare the annual income statement for Kvass, Inc. KVASS, INC. Income Statement For the Year Ended December 31, Year 3 Revenues: Total Revenues Expenses: Total Expenses
Use the following Year 3 data: Other Selling and Administrative Expenses Other Expenses Sales Revenue Advertising and Promotion Expenses Salaries and Wages Expense Income Tax Expense Interest Expense $1,050,480 247,700 4,885,400 552,550 2,524,600 166,550 113,950 Required: Prepare the annual income statement for Kvass, Inc. KVASS, INC. Income Statement For the Year Ended December 31, Year 3 Revenues Total Revenues Expenses Total Expenses
Sales (500,000 units) Costs and expenses Direct materials Direct labor Overhead Selling expenses Administrative expenses Total costs and expenses Net income $7,500.888 1,000,000 2,000,000 see,eee 750.800 1,285.cee 5.535.000 $1,965,000 The company has an opportunity to sell 50,000 additional units at $13 per unit. The additional sales would not affect its current expected sales. Direct materials and labor costs per unit would be the same for the additional units as they are for the regular units. However, the additional volume would...
Crabbe Company reported $80,000 of selling and administrative expenses on its income statement for the past year. The company had depreciation expense and an increase in prepaid expenses associated with the selling and administrative expenses for the year. Assuming use of the direct method, how would these items be handled in converting the accrual-based selling and administrative expenses to a cash basis? Deducted from depreciation; deducted from expenses Added to depreciation; added to expenses Deducted from depreciation; added to expenses...
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