Business, 17.03.2020 05:40, alex24gonzales
Franklin Manufacturing Company (CMC) was started when it acquired $99,000 by issuing common stock. During the first year of operations, the company incurred specifically identifiable product costs (materials, labor, and overhead) amounting to $67,500. CMC also incurred $67,500 of engineering design and planning costs. There was a debate regarding how the design and planning costs should be classified. Advocates of Option 1 believe that the costs should be classified as general, selling, and administrative costs. Advocates of Option 2 believe it is more appropriate to classify the design and planning costs as product costs. During the year, CMC made 4,500 units of product and sold 3,900 units at a price of $36.00 each. All transactions were cash transactions. Required a-1. Prepare an income statement and balance sheet under option 1. a-2. Prepare an income statement and balance sheet under option 2. b. Identify the option that results in financial statements that are more likely to leave a favorable impression on investors and creditors. c. Assume that CMC provides an incentive bonus to the company president equal to 15 percent of net income. Compute the amount of the bonus under each of the two options. Identify the option that provides the president with the higher bonus. d. Assume a 35 percent income tax rate. Determine the amount of income tax expense under each of the two options. Identify the option that minimizes the amount of the company’s income tax expense.
Answers: 3
Other questions on the subject: Business
Business, 21.06.2019 17:50, caitlinhardin8553
Which of the following best explains why a large company can undersell small retailers? a. large companies can offer workers lower wages because they provide more jobs. b. large companies can pay their employees less because they do unskilled jobs. c. large companies can negotiate better prices with wholesalers. d. large companies have fewer expenses associated with overhead.
Answers: 1
Business, 22.06.2019 07:00, ronnie7898
Amarket that consists of all possible consumers regardless of their specific needs or wants is a
Answers: 1
Business, 22.06.2019 14:30, Hannahdavy5434
Stella company sells only two products, product a and product b. product a product b total selling price $50 $30 variable cost per unit $20 $10 total fixed costs $2,110,000 stella sells two units of product a for each unit it sells of product b. stella faces a tax rate of 40%. stella desires a net afterminustax income of $54,000. the breakeven point in units would be
Answers: 3
Business, 22.06.2019 19:00, lonelynomad00
Adrawback of short-term contracting as an alternative to making a component in-house is thata. it is the most-integrated alternative to performing an activity so the principal company has no control over the agent. b. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality. c. it fails to allow a long planning period that individual market transactions provide. d. the buying firm cannot demand lower prices due to the lack of a competitive bidding process.
Answers: 2
Do you know the correct answer?
Franklin Manufacturing Company (CMC) was started when it acquired $99,000 by issuing common stock. D...
Questions in other subjects:
Mathematics, 18.06.2020 05:57
English, 18.06.2020 05:57
