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Accounting Two problems - Letterman Company & Kennedy Company




Question;#1 Letterman Company produces and sells two products: A and B in the ratio of 3A to 5B. Selling prices for A and B are, respectively, $1,200 and $240, respective variable costs are $480 and $160. The company's fixed costs are $1,800,000 per year.Compute the volume of sales in units of each product needed to:Required:a. break even.b. earn $800,000 of income before income taxes.c. earn $800,000 of income after income taxes, assuming a 30 percent tax rate.d. earn 12 percent on sales revenue in before-tax income.e. earn 12 percent on sales revenue in after-tax income, assuming a 30 percent tax rate.#2 Kennedy Company has the following collection pattern for its accounts receivable:40 percent in the month of sale50 percent in the month following the sale8 percent in the second month following the sale2 percent uncollectibleThe company has recent credit sales as follows:April: $200,000May: 420,000June: 350,000How much should the company expect to collect on its receivables in June?


Paper#42705 | Written in 18-Jul-2015

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