BU330 Accounting for Managers



Part 1:



Factoring resource constraints into product mix decisions



Rose Incorporated manufactures two types of vases, small and large.



The following per-unit data are available.



Small Vase Large Vase



Sale price $60 $100

Variable costs $35 $60

Machine hours required for 1 vase 1 2



Total fixed costs are $600,000, and Rose Incorporated can sell a maximum of 25,000 units of each type of vase annually. Machine hour capacity is 50,000 hours per year.



a. Determine the contribution margin per unit for each type of vase.



b. Determine the contribution margin per machine hour for each type of vase.



c. Determine the number of units of each style of vase that Rose Incorporated should produce to maximize operating income.



d. What is the dollar amount of the maximum operating income as calculated in C above?







Part 2:



Financial Statement Analysis



The following information relates to Harris Corporation.

























































































Account



Current year



Prior year


Net sales (all credit)



$520,125



$499,500


Cost of goods sold



$375,960



$353,600


Gross profit



$144,165



$145,900


Income from operations



$ 95,500



$ 79,900


Interest expense



$ 23,500



$ 19,500


Net income



$ 57,600



$ 51,600


Cash



$ 30,600



$ 15,900


Accounts receivable, net



$ 33,800



$ 23,200


Inventory



$ 42,000



$ 30,300


Prepaid expenses



$ 2,000



$ 1,500


Total current assets



$ 108,400



$ 70,900


Total long-term assets



$ 62,000



$ 38,000


Total current liabilities



$ 46,000



$ 41,600


Total long-term liabilities



$ 20,000



$ 22,700


Common stock, no par,

3,000 shares, value $50/share



$ 30,000



$ 30,000






Required:



a. What is the acid-test ratio for the current year?



b. What is the inventory turnover for the current year?



c. What is days' sales in receivables for the current year?



d. What is the book value per share of common stock for the current year?



e. What is the price-earnings ratio for the current year?



f. What is the rate of return on total assets for the current year?



g. What is the times-interest-earned ratio for the current year?



h. What is the current ratio for the current year?

Answer will be sent by email as attachment.