Project #61889 - Case Study

Shoffner, H. G., Shelly, S., & Cooke, R. A. (2011) Case studies on pages: 55 and 76-77

Case Study 1a

In September, Wally’s Wallpaper Company had the following transactions relating to sales and cost of goods sold: n Wally sold 500 rolls of wallpaper at $10 each. All of the wallpaper sold was of one design. n Inventory on the 1st of September was 100 rolls of wall paper at $3 each. n On September 3, Wally bought 300 rolls of wall paper whole sale, at $4 each. n On September 18, he found that the wholesale price of the wallpaper had gone up to $5 each, but he had to have some, so he bought 250 rolls at $5 each. n Inventory at the end of the month was 150 rolls ls of wallpaper.(Wally values his inventory on a first in, first out basis.)Your assignment: Make up an accrual basis report of sales and cost of goods sold, similar to those for the Spouse House Company in this chapter. Use the following form:


Wally’s Wallpaper Company September Report

Net sales

Minus cost of goods sold:

Beginning inventory _______

Add purchases _______

Goods available for sale _______

Subtract ending inventory _______

Cost of goods sold _______

Net income

Case Study 2b

Charlene Ripper and Tonya Upper own and run the Ripper-Upper Carpet Cleaning Company.

They charge $100 for each carpet-cleaning job. Their expenses are:

Sales commission: 20 percent ($20 for each job sold).

Operator: (the individual, who actually pushes the equipment over the carpets $30 per carpet cleaning job)

Gas for truck: average $5 per cleaning job

Soap: $2 per job

Maintenance of cleaning machine: overhaul of machine costs$300 and has to be done after every 100 jobs (Hint: Divide the$300 overhaul costs by the 100 jobs to find the overhaul cost per job)Rent, office and warehouse: $500 per month

Salaries to Charlene and Tonya: total $2,250 per month

Receptionist: $1,200 per month

Insurance: $100 per month

Utilities and telephone: $150 per month (Note: All figures for commissions, salaries, and wages include payroll tax expense.)Your assignment: Separate the expenses into two lists:

1.Variable expenses. List these with the dollar amount of cost per cleaning job.

2.Fixed expenses. List these with the dollar amount of the expense per month.

Compute the contribution margin by subtracting variable expenses per job from the sales price of a job. Compute the breakeven point by dividing total fixed expenses by the contribution margin. Use the following form. It should help.

Variable Expenses:

Total Variable Expenses


Fixed Expenses:

Computation of contribution margin:

Sales price of cleaning job$100

Subtract variable expenses per job (above)

Contribution margin$

Breakeven point:

Total fixed expenses divided by contribution margin

= $ ÷$ = Cleaning jobs per month

Subject Business
Due By (Pacific Time) 03/14/2015 12:00 am
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