6) The vertical analysis statement of Nobell Inc. is as below: The figure 47.0%
ID: 2497486 • Letter: 6
Question
6) The vertical analysis statement of Nobell Inc. is as below:
The figure 47.0% shown for gross profit in 2016 signifies that:
A) gross profit is equal to 47.0% of net income.
B) gross profit is increased by 47.0% over the previous year.
C) gross profit is 47.0% of net sales revenue.
D) gross profit is 47.0% of cost of goods sold.
7) Healthier Cook Company manufactures two products: toaster ovens and bread machines. The following data are available:
Toaster Ovens
Bread Machines
Sale price
$80
$150
Variable costs
$40
$70
Healthier Cook can manufacture six toaster ovens per machine hour and four bread machines per machine hour. Healthier Cook's production capacity is 1,800 machine hours per month. What is the contribution margin per machine hour for toaster ovens?
A) $235
B) $320
C) $7
D) $20
8) Clay Corporation manufactures two styles of lamps—a Bedford Lamp and a Lowell Lamp. The following per unit data are available:
Bedford Lamp
Lowell Lamp
Sale price
$25
$35
Variable costs
$17
$23
Machine hours required for 1 lamp
2
4
Total fixed costs are $30,000. Marketing data indicate that the company can sell up to 8,000 units of the Bedford lamp and up to 4,000 units of the Lowell lamp. Machine hour capacity is 25,000 hours per year. What product mix will deliver the optimum operating income?
A) 4,500 Bedford lamps, 4,000 Lowell lamps
B) 12,500 Bedford lamps, zero Lowell lamps
C) 8,000 Bedford lamps, 2,250 Lowell lamps
D) 7,500 Bedford lamps, 3,000 Lowell lamps
9) Delleate Inc. has prepared the following purchases budget:
Month
Budgeted Purchases
June
$67,000
July
72,500
August
76,300
September
73,700
October
69,200
All purchases are paid for as follows: 10% in the month of purchase, 50% in the following month, and 40% two months after purchase. Calculate balance of Accounts payable at the end of October.
A) $77,680
B) $91,760
C) $69,330
D) $74,290
10) Gladeer Company is evaluating an investment that will cost $520,000 and will yield cash flows of $300,000 in the first year, $200,000 in the second year, and $100,000 in the third and final year. Use the tables below and determine the internal rate of return.
Present value of $1:
8%
9%
10%
11%
1
0.926
0.917
0.909
0.901
2
0.857
0.842
0.826
0.812
3
0.794
0.772
0.751
0.731
4
0.735
0.708
0.683
0.659
5
0.681
0.65
0.621
0.593
The IRR of the project will be:
A) between 9% and 10%.
B) less than 8%
C) less than 9%, more than 8%
D) more than 10%
11) Olivera Inc. provides the following data for the year 2015:
Sales Revenue
$625,000
Sales Returns and Allowances
20,000
Sales Discounts
5,000
Net Sales Revenue
$600,000
Assume the cost of goods sold is $350,000. On vertical analysis report, gross profit as a percentage of net sales will be:
41.67%
35.9%
56.1%
44.1%
12) Peartree Inc. provides the following income statement for the year 2015:
2015
Net Sales
$240,000
Cost of Goods Sold
110,000
Gross Profit
$130,000
Operating Expenses:
Selling Expenses
45,000
Administrative expenses
12,000
Total Expenses
57,000
Operating Income
$73,000
Other Revenues and (Expenses):
Loss of sale of capital assets
(23,000)
Interest Expense
(1,000)
Total Other Revenues and (Expenses)
(24,000)
Income Before Taxes
$49,000
Income Tax Expense
5,000
Net Income
$44,000
Calculate the times interest earned ratio.
13) Atlantis Inc. reported the following data:
Increase (Decrease)
(in millions)
2015
2014
Amount
Percentage
Assets
Current Assets:
Cash
$10,000
$7,200
$2,800
38.9%
Accounts Receivable, net
15,600
16,800
(1,200)
(7.1)%
Merchandise Inventory
38,000
31,000
7,000
22.6%
Total Current Assets
63,600
55,000
8,600
15.6%
Property, plant and equipment, net
195,000
168,000
27,000
16.1%
Other long term assets
15,000
27,100
(12,100)
(44.6%)
Total assets
$273,600
$250,100
$23,500
9.4%
Liabilities
Current liabilities:
Accounts payable
$8,500
$7,300
$1,200
16.4%
Other current liabilities
1,400
3,900
(2,500)
(64.1%)
Total current liabilities
9,900
11,200
(1,300)
(11.6%)
Long term notes payable
54,000
30,000
24,000
80.0%
Total liabilities
$63,900
41,200
$22,700
55.1%
Stockholders’ Equity
Common stock
$12,000
$12,000
$0
0.0%
Paid in capital in excess of par
$149,000
149,000
0
0.0%
Retained earnings
48,700
47,900
800
1.7%
Total stockholders’ equity
$209,700
$208,000
$800
0.4%
Total liabilities and stockholders’ equity
$273,600
$250,100
$23,500
9.4%
The horizontal report shows that the amount of total liabilities has:
increased by $2,500.
decreased by $2,500.
increased by $22,700.
14) eBay Inc. provides the following data:
2015
2014
Assets
Current Assets:
Cash and Cash Equivalents
$29,000
$25,000
Accounts Receivable, Net
31,000
62,000
Merchandise Inventory
53,000
50,000
Total Current Assets
$113,000
137,000
Property, Plant, and Equipment, Net
120,000
120,000
Total Assets
$233,000
257,000
Net Sales
$500,000
Cost of Goods Sold
(150,000)
Gross Profit
$350,000
Calculate the asset turnover for the year 2015.
1.22 times
1.55 times
2.04 times
7.27 times
15) The following is a summary of information presented on the financial statements of a company on December 31, 2015.
Account
2015
2014
Current Assets
$65,000
$50,000
Accounts Receivable
80,000
75,000
Merchandise Inventory
50,000
40,000
Current Liabilities
75,000
50,000
Long-term Liabilities
30,000
50,000
Common Stock
50,000
40,000
Retained Earnings
40,000
25,000
Net Sales Revenue
$525,000
$500,000
Cost of Goods Sold
400,000
395,000
Gross Profit
$125,000
$105,000
Selling Expenses
45,000
50,000
Net Income before income tax expense
$80,000
$55,000
Income tax expense
24,000
16,500
Net income
$56,000
$38,500
What would a horizontal analysis report show with respect to current liabilities?
a 33.3% increase in current liabilities
a current ratio of 0.87
current liabilities are 38.46% of total capital
a 50.00% increase in current liabilities
Toaster Ovens
Bread Machines
Sale price
$80
$150
Variable costs
$40
$70
Explanation / Answer
6)
C) gross profit is 47.0% of net sales revenue.
Gross profit is net sales minus the cost of goods sold. (Some people use the term gross margin and gross profit interchangeably. Others use gross margin to mean the gross profit ratio or the gross profit as a percentage of net sales.)
10)
C) less than 9%, more than 8%
Year cash flows Discount factor @ 8% Present Value Discount factor @ 9% Present Value 0 -5,20,000.00 1.00 -5,20,000.00 1.00 -5,20,000.00 1 3,00,000.00 0.926 2,77,800.00 0.917 2,54,742.60 2 2,00,000.00 0.857 1,71,400.00 0.842 1,44,318.80 3 1,00,000.00 0.794 79,400.00 0.772 61,296.80 Net Present Value 8,600.00 -59,641.80Related Questions
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