Situation Audit Swisher Mower is a lawn and garden company that manufacturers lawn mowers in its plant in Warrensburg, Missouri. The company’s flagship product is the Ride King. In 1996, Swisher was approached by a national merchandise retailer offering to distribute Swisher’s standard mower under a private label. The retailer offered to distribute the product line, but included several stipulations that would change the Swisher’s distribution methods of its product. Sales within the industry are
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producing goods, rendering services, or other activities that constitute the entity’s ongoing major or central operations.” In other words, revenue tracks the inflow of net assets that occurs when a business provides goods or services to its customers. (T5-1) B. To determine how much revenue to recognize and when to recognize it, we apply the core revenue recognition principal: Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to
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ratios GROSS MARGIN LAST YEAR: 55.56% CURRENT YEAR: 51.02% 1. Possible reasons for Maria and Amanda’s Business Gross Profit Margin to decrease from the previous year is as follows; Discounting; because discounting could reduce gross profits which reduce gross profit margin Shrinkage; because shrinkage will increase costs of goods sold reducing gross profit resulting in lower gross margin percentages. Note that the sales rep was caught given away free samples). Higher costs of goods; because
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influencing the company and its decision making. Later, we try and evaluate the various ratios to appreciate their impact on company’s performance over the last five years. The financial statements of last five years are identified, studied and interpreted in light of company’s performance. Critical decisions are anal yzed and their impact on the bottom line of the company is assessed. Finally, we study ratio analysis of the company to analyze the financial position of the company in last five
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decision. In addition to this, both lenders and other potential lenders use financial ratios to assess the future performance of a company in which they plan to invest in. Managers use this information in order to judge the performance of their entity and to control the day-to- day operation of that entity and owners make use of financial ratios to evaluate whether their companies are maximizing their wealth or not. Ratio analysis is used to compare a firm’s performance and status with that of other firms
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000 Cost of goods manufactured: Beginning work in process ……………… 120,000 Direct materials used ……………………. 705,000 Direct labor ……………………………… 135,000 Manufacturing overhead ………………… 370,000 Ending work in process …………………. Cost of goods manufactured …………... 1,200,000 2. | |Cost |Cost Type | | |a. The cost of the
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Check Figures to accompany INTERMEDIATE ACCOUNTING Seventh Edition Spiceland, Sepe and Nelson Chapter 1 BE 1-1 Net income, $208,000 BE 1-2 1. Liabilities BE 1-3 2. The economic entity assumption BE 1-4 1.The matching principle BE 1-5 3. Disagree, matching principle E1-1 Req. 1, Net operating cash flow, Yr. 2, $50,000 Req. 2, Net income, Year 1, $25,000 E1-2 Req. 1, Net income, Year 2, $190,000 E1-5 3. Auditors E1-6 5. Comprehensive income E1-7
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Var. cost per unit: Units sold: 410000 Price per unit: $68 $60 Fixed costs: $1,640,000 Revenue = Revenue = Total Variable Cost = Total Va 1. a. Contribution margin Contribution Margin = Total Revenues - Total Variable Costs Contribution Margin = $27,880,000 - $24,600,000 Contribution Margin = $3,280,000 b. Operating Income Operating Income = Total Revenue -Total Var. Costs - Fixed Costs Total Revenue Total Variable Cost Fixed Costs Operating Income 2. Effect of New Equipment Units sold: Price
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100 = 800 shares 2. Common stock (10 par value) sold in 20X6 = 2,350,000 – 1,750,000 = $600,000 Number of common stock sold = 600,000 / 10 = 60,000 shares Additional paid in capital = 4,620,000 - 3,600,000 = $1,020,000 Average issue price of common stock sold in 20X6: Par value of common stock issued
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| |Average revenue per transactions |$12,00 | |No. of transactions |264.000 | |Average merchandise cost per transaction |$8,50 | |Operating P&L, year ending June 1998 | | |Revenues | |$3.168.000
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