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Prepared income statement questions for Hughes Co.

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1------The following infrmation is available for Hughes Co.

2010 2009 2008
-------------------------------------------------------------------------------------------------
Net income $2,500 $1,700 $1,900
Net Sales $37,000 $35,000 $32,000
Total Assets $420,000 $395,000 $375,000

From the information provided, calculate Hughes`s profit margin ratio for each of the three years. In 2009 economic conditions and a slowing economy impacted the results of operations. Comment on the results, assuming that the industry average for the profit margin ration is 7% for each of the three years

2------The closing process is a step in the accounting cycle that prepares accounts for the next accounting period.

True or False

3-----All necessary numbers to prepare the income statement can be taken from the income statement columns of the work sheet, including the net income or net loss

True or False

4-----When expenses exceed revenues, there is a net loss and the Income Summary account would have a credit balance

True or False

5-----Current liabilities are cash and other resources that expected to be sold, collected or used within one year or the company`s operating cycle whichever is longer

True or False

6-----Intangible assets are long-term resources that benefit business operations that usually lack physical form and have uncertain benefits

True or False

7-----Reversing entries

a; Are optional

b; Are mandatory

c; Correct errors in journal entries

d; Are required by GAAP

e; Are prepared on the worksheet

8------Revenue, expense, withdrawals, and Income Summary are called ( )
accounts because they are closed at the end of each accounting period

9------A company`s post-closing trial balance has a debit total of $475,000 and a credit total of $457,000. This indicates that ( ).

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Solution Summary

The problem set deals with topics under accounting.

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Hughes Satellite Corp. manufactures satellite dishes used in residential and commercial applications. For each unit the following costs apply: $50 for direct materials, $100 for direct labor, and $60 for variable overhead. The company's annual fixed overhead cost is $750,000; it uses expected capacity of 12,500 units produced as the basis for applying fixed overhead to products. A commission of 10% of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are $180,000. The following additional information is available:

2010 2011
Selling price per unit $500 $500
Number of units sold 10,000 12,000
Number of units produced 12,000 11,000
Beginning inventory (units) 7,500 10,000
Ending inventory (units) 10,000 ?

1. Assume the company uses absorption costing.
A. Compute the unit product cost in each year.
B. Prepare an income statement for the year.

2. Assume the company uses variable costing.
A. Compute the unit product cost in each year.
B. Prepare an income statement for the year.

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