Haram Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $182.10 per unit.
AC 204 Name
Short Project 1
SUM 2016
Problem 1
Haram Corporation is a wholesaler that sells a single product. Management has provided the following cost data for two levels of monthly sales volume. The company sells the product for $182.10 per unit.
Year 1 Year 2
Sales volume (units) 4,000 5,000
Sales $728,400 $910,500
Cost of Sales (385,200) (481,500)
Rent Expense ( 50,000) ( 50,000)
Selling and Administrative Expenses (286,400) (310,500)
Net Operating Income $ 6,800
$68,500
Required A: Explain whether each cost is a Variable, Fixed or Mixed Cost. Provide support for your answer.
Cost of Sales:______________________________________________________________
Rent Expense______________________________________________________________
Selling and Administrative Expenses
Required B: Break out each Year 1 cost item into its VARIABLE and FIXED cost amounts.
Total Variable Cost Fixed Cost
Cost of Sales (385,200)
Rent Expense ( 50,000)
Selling and Administrative Expenses (286,400)
Required B: Break out each Year 2 cost item into its VARIABLE and FIXED cost amounts.
Total Variable Cost Fixed Cost
Cost of Sales (481,500)
Rent Expense ( 50,000)
Selling and Administrative Expenses (310,500)
Requirement C: Prepare a Year 1 Contribution Margin Income Statement. Properly label all items to receive full credit.
PROBLEM 2
Assume X Co began operations at the beginning of the year and present you with the following transactions.
#1 Account Amount Amount
Cash 22,000
Capital Stock 22,000
#2 Account Amount Amount
Accounts Receivable 100,000
Revenues 100,000
#3 Account Amount Amount
Inventory 70,000
Accounts Payable 70,000
#4 Account Amount Amount
Cash 10,000
Accounts Receivable 10,000
#5 Account Amount Amount
Accounts Payable 43,000
Cash 43,000
#6 Account Amount Amount
Expense 6,000
Accounts Payable 6,000
Prepare T-Accounts for each of the Accounts shown above in each of the six journal entries. Post the journal entry transactions to the T-Accounts, summarize and determine the ending balances in each T-Account. Accounts which should have T-Accounts are: CASH, ACCOUNTS RECEIVABLE, INVENTORY, ACCOUNTS PAYABLE, CAPITAL STOCK, REVENUES AND EXPENSES. Assume the beginning balance in all accounts is zero.
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