need helpA partial list of Waterways accounts and their balances for the month of November

follows. Accounts Receivable $ 295!!! Advertisin" #$penses 5%!!! &ash 2'!!!!

(epreciation)*actory #+uipment ,'-!! (epreciation).ffice #+uipment 25!! (irect /abor
22!!! *actory 0upplies 1sed ,'-5! *actory 1tilities ,!2!! *inished 2oods 3nventory
November 4! '-4!! *inished 2oods 3nventory .ctober 4, 5255! 3ndirect /abor %-!!!
.ffice 0upplies #$pense ,%!! .ther Administrative #$penses 52!!! 6repaid #$penses
%,25! Raw 7aterials 3nventory November 4! 525!! Raw 7aterials 3nventory .ctober 4,
4-!!! Raw 7aterials 6urchases ,-5%!! Rent)*actory #+uipment %5!!! Repairs)*actory
#+uipment %2!! 0alaries 425!!! 0ales ,45!!!! 0ales &ommissions %!5!! Wor8 3n
6rocess 3nventory .ctober 4, 529!! Wor8 3n 6rocess 3nventory November 4! %2!!!
3nstructions
9a: ;ased on the information "iven construct an or"ani<ational chart of Waterways
&orporation
0toc8holders
;oard of (irectors
6resident
=ice 6resident 6roduction =ice 6resident 7ar8etin" =ice 6resident *inance
9b: A list of accounts and their values are "iven above. *rom this information prepare a cost
of "oods manufactured schedule an income statement and the current assets section of the
balance sheet for Waterways &orporation for the month of November. WA>#RWA?0
&ost of "oods manufactured
Raw 7aterials 3nventory .ctober 4, 4-!!!
Add
Raw 7aterials 6urchases ,-5%!!
Available for use 224%!!
/ess
Raw 7aterials 3nventory November 4! 525!!
Raw material used ,5!5!!
(irect labor 22!!!
3ndirect /abor %-!!!
(epreciation)*actory #+uipment ,'-!!
*actory 0upplies 1sed ,'-5!
*actory 1tilities ,!2!!
Rent)*actory #+uipment %5!!!
Repairs)*actory #+uipment %2!!
>otal manufacturin" cost 44555!
Add
Wor8 3n 6rocess 3nv .ctober 4, 529!!
/ess
Wor8 3n 6rocess 3nv. November 4! %2!!!
&ost of "oods manufactured 4%''5!
&ost of "oods 0old
&.27 4%''5!
Add
*inished 2oods 3nv. .ctober 4, 5255!
/es
*inished 2oods 3nv. November 4! '-4!!
&ost of "oods sold 45!9!!
3ncome statement
0ales ,45!!!!
/ess
0ales commission @%!5!!
Net sales ,4!95!!
/ess cost of "oods sold @45!9!!
2ross profit 95-'!!
/ess operatin" e$penses
0alaries 425!!!
Advertisin" #$penses 5%!!!
(epreciation 25!!
.ffice 0upplies ,%!!
.ther Administrative 52!!! @%5%9!!
Net income 5!45!!
&urrent Assets
Accounts Receivable 295!!!
&ash 2'!!!!
6repaid #$penses %,25!
Raw 7aterials 3nventory November 4! 525!!
Wor8 3n 6rocess 3nv. November 4! %2!!!
*inished 2oods 3nv. November 4! '-4!!
>otal current assets 55925!
&.N>3N13N2 6R.;/#7A W&6,- 9>his is a continuation of the Waterways 6roblem from
&hapters ,% throu"h ,5.: =ice 6resident for 0ales and 7ar8etin" 0am >otter is tryin" to plan
for the comin" year in terms of production needs to meet the sales demand. Be is also tryin"
to determine ways in which the companys profits mi"ht be increased in the comin" year.
3nstructions 9a: Waterways mar8ets a simple water control and timer that it mass@produces.
(urin" the year the company sold '9'!!! units at an avera"e sellin" price of $%.22 per unit.
>he variable e$penses were $2!542!! and the fi$ed e$penses were $'-444-.
9,: What is the products contribution mar"in ratioC
2945,2!@2!542!!D2945,2! E .4 or 4!F
92: What is the companys brea8@even point in units and in dollars for this productC
'-444-D.4 E $2255594
2255594D%.22 E 5495', units
94: What is the mar"in of safety both in dollars and as a ratioC
2945,2!@2255594 E $'59425
'59425D2945,2! E .22%5 or 22.%5F
9%: 3f mana"ement wanted to increase its income from this product by ,!F how many
additional units would have to be sold to reach this income levelC
6resent income
2945,2! $ .4 E--,,4'@'-444-E ,9559-
>ar"eted income E ,9559- $ ,., E 2,555-
0ales should be E '-444-G2,555-.4 E $4!!4!52
0ales in units E 4!!4!52D%.22 E 5,,'2% H '9'!!! E ,5'2% additional unit
95: 3f sales increase by 5,!9! units and the cost behaviors do not chan"e how much will
income increase on this productC
5,!9! $ %.22 E 4!!!!! $ .4 E$9!!!! additional net income
9b: Waterways is thin8in" of mass@producin" one of its special@order sprin8lers. >o do so would
increase variable costs for all sprin8lers by an avera"e of $!.5, per unit. >he company also
estimates that this chan"e could increase the overall number of sprin8lers sold by ,!F and
the avera"e sales price would increase $!.25 per unit. Waterways currently sells %9,5%!
sprin8ler units at an avera"e sellin" price of $2'.5!. >he manufacturin" costs are $'-'45,2
variable and $2!5!,%! fi$ed. 0ellin" and administrative costs are $2'',452 variable and
$59%95! fi$ed. 9,: 3f Waterways be"ins mass@producin" its special@order sprin8lers how
would this affect the companyC
3ncrease in revenues
%9,5%! $ .25 E ,22945
%9,5% $ 2'.55 E ,4,5%!5
>otal E ,%4-4%!
/ess additional
&ost
5%!9,% $ .5, E 4-%!%-
=ariable mf". E '-'45, 9'-'45,2D%9,5%! $ %9,5%I
=ariable sellin" E 2'',45 92'',452 $ .,:
Net chan"e in profit E ,!,-!'
92: 3f the avera"e sales price per sprin8ler unit did not increase when the company be"an
mass@producin" the special@order sprin8ler what would be the effect on the company.
Proft from above 101806
Less afect of selling price
540914 .!5 "1#5!!9
$et %ecrease in proft "##4!#