Account Balances Assignment
The Howell Corporation has the following account balances (in millions): $325 100 For Specific Date Direct materials inventory, Jan. 1, 2014 Work-in-process inventory, Jan. 1, 2014 Finished goods inventory, Jan. 1, 2014 Direct materials inventory, Dec 31, 2014, Work-in-process inventory, Dec. 31, 2014, Finished goods inventory, Dec. 31, 2014, 80 $15 10 70 20 5 55 For Year 2014 Purchases of direct materials Direct manufacturing labor Depreciation-plant and equipment Plant supervisory salaries Miscellaneous plant overhead Revenues Marketing, distribution, and customer-service costs Plant supplies used Plant utilities Indirect manufacturing labor Required: Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2014. (For additional questions regarding these facts, see the next problem.) 3-36 (30-40 min.) CVP analysis, income taxes. (CMA, adapted). Brooks and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years.
However, increased competition has led Mr. Brooks, the president, to believe that an aggressive marketing campaign will be necessary next year to maintain the company's present growth. To prepare for next year's marketing campaign the company's controller has prepared and presented Mr. Brooks with the following data for the current year, 2014: Variable cost (per bowl) 18 * 00 view View = 4+ ABBbcedge AaBbccDdEe AaBbCcDc AaBbccdet AaBb Heading 1 Heading 2 Normal No Spacing Title LLLLLLLLL Direct materials $ 3.00 8.00 Direct manufacturing labor Variable overhead (manufacturing, marketing, distribution, and customer service) 7.50 Total variable cost per bowl $ 18.50 Fixed costs Manufacturing $ 20,000 194,500 Marketing, distribution, and customer service Total fixed costs $214,500 Selling price $ 35.00 $770,000 Expected sales, 22,000 units Income tax rate 40% Required: 1. What is the projected net income for 2014? 2. What is the breakeven point in units for 2014? 3. Mr. Brooks has set the revenue target for 2015 at a level of $875,000 (or 25,000 bowls). He believes an additional marketing cost of $16,500 for advertising in 2015, with all other costs remaining constant, will be necessary to attain the revenue target. What is the net income for 2015 If the additional $16,500 is spent and the revenue target is met? 4. What is the breakeven point in revenues for 2015 if the additional $16,500 is spent on advertising? 5. If the additional $16,500 is spent, what are the required 2015 revenues for 2015 net income to equal the 2014 net income? 6. At a sales level of 25,000 units, what maximum amount can be spent on advertising if a 2015 net income of $108,450 is desired? Focus IN. .