11-8) a b c d e f g h i j Transaction/Event Purchased inventory on account Sold inventory for cash, at a profit Issued a 10% stock dividend Issued

common stock for cash Sold land at a gain Purchased treasury stock for cash Accrued interest on a note payable Accrued wages that have been earned by employees Purchased equipment for cash Issued bonds at an interest rate that is less than the companys ROI

Financial Ratio +/Number of Days' Sales in Inventory + Inventory Turnover + Earnings per Share Debt Ratio Return on Investment + Debt/Equity Ratio + Times Interest Earned Current Ratio Plant & Equipment Turnover Return on Equity +

Explanation This is because an increase in inventory causes the numerator of the ratio to increase This is because an increase in sales causes both the cost of goods sold as well as the inventory turnover to increase This is because an increase in the number of shares outstanding causes the denominator in the ratio to increase, henc This is because Assets & Equity would increase while Liabilities would remain the same This is because net income would increase - numerator of the ratio This is because Equity would decrease while liabiities would remain the same This is because Interest Expense - denominator in the ratio would increase This is because current liabilities - denominator would increase An increase in Plant & Equipment would increase the denominator This is because Liabilities (Debt) would increase, but not equity, therefore ROE would increase

y turnover to increase e ratio to increase, hence EPS would decrease

11-10) CAMPBELL SOUP COMPANY Total current assets Plant assets, net of depreciation Goodwill Total other long-term assets Total assets Total current liabilities Total long-term liabilities (including deferred taxes) Total equity Total liabilities and equity Amount $1,963 $2,103 $2,133 $663 $6,862 $1,989 $3,777 $1,096 $6,862 Percentage 28.6% 30.6% 31.1% 9.7% 100.0% 29.0% 55.0% 16.0% 100.0%

Net Earnings Net Sales Average Total Assets Average Total Equity Market Value per CS share Diluted EPS Dividend Declared Current Assets Current Liabilities Cash & Cash Equivalents Accounts Receivables Cost of Products Sold Inventory Average Accounts Receivable Average Inventories Average plant assets, net of depreciation Total Liabilities Total liabilities and stockholders equity Total stockholders equity Number of Employees per Year Earnings before interest and taxes Days in the Year

$802.00 $7,719.00 $6,569.00 $1,012.50 $33.05 $2.42 $1.15 $1,963.00 $1,989.00 $484.00 $560.00 $4,616.00 $767.00 $536.00 $745.50 $2,077.00 $5,766.00 $6,862.00 $1,096.00 17,500 $1,279 365

a) 1) Margin Turnover ROI 2) ROE 3) Price/Earnings Ratio 4) Dividend Yield 5) Dividend payout ratio

10.4% 1.2 12.2%

79.2%

13.7

3.5%

47.3%

b) 1) Working Capital 2) Current Ratio 3) Acid-Test Ratio c) 1) Average Daily Sales Number of days' sales in accounts receivable 2) Average day's cost of products sold Number of days' sales in inventory 3) Accounts receivable turnover 4) Inventory turnover 5) Net property, plant, and equipment turnover d) 1) Debt Ratio 2) Debt/equity ratio e) 1) Net sales per employee 2) Operating income per employee

($26.00) 0.99 0.52

$21.15 26.5 $12.65 60.6 14.4 6.2 3.7

84.0% 526.1%

$441,086 $73,086

Alpha Co Activity Per Unit Costs: Variable Fixed Mixed Total b) Variable Rate Fixed Costs $2 $10,000 $30,000 $20,000 $60,000 $16,000 $30,000 $24,500 $70,500 September 5,000 October 8,000

$1.50 $12,500

Cost Formula = Fixed cost + (Variable rate Volume) = $12,500 + $1.50 per unit

Units Sold a) Revenues Variable Expenses: Cost of Goods Sold Selling Expenses Administrative Expenses Total Variable Expenses Contribution Margin Fixed Expenses: Cost of Goods Sold Selling Expenses Administrative Expenses Total Fixed Expenses Operating Income b) Contribution Margin per Unit Contribution Margin Ratio c) Units Sold

15,000 Unit $7 $3.60 $0.80 $0.50 $4.90 $2.10 Total $105,000 $54,000 $12,000 $7,500 $73,500 $31,500 $8,000 $1,500 $4,000 $13,500 $18,000 Percentage 1 51.43% 11.43% 7.14% 70% 30%

$2.10 30%

20,000 Unit $7 $3.60 $0.80 $0.50 $4.90 $2.10 Total $140,000 $72,000 $16,000 $10,000 $98,000 $42,000 $8,000 $1,500 $4,000 $13,500 $28,500

10,000 Total $70,000 $36,000 $8,000 $5,000 $49,000 $21,000 $8,000 $1,500 $4,000 $13,500 $7,500

Revenues Variable Expenses: Cost of Goods Sold Selling Expenses Administrative Expenses Total Variable Expenses Contribution Margin Fixed Expenses: Cost of Goods Sold Selling Expenses Administrative Expenses Total Fixed Expenses Operating Income d) 1)

Increase in Revenues New Revenues Contribution Margin Fixed Expenses Operating Income 2) Decrease in Revenues New Revenues Contribution Margin Fixed Expenses Operating Income

$15,000 $120,000 $36,000 $13,500 $22,500

$10,000 $95,000 $28,500 $13,500 $15,000

Miller Metal Co Unit Sales Price Variable Cost per Unit Fixed Costs a) Unit Contribution Margin BEP in Units b) Current Sales BEP in Sales Dollars Margin of Safety Margin of Safety Ratio c) Units Sold Revenue Less: Variable Expense Contribution Margin Less: Fixed Expenses Operating Income d) Selling Price Increase in Advertising Expenses New Fixed Expense New Unit Sales Revenue Less: Variable Expense Contribution Margin Less: Fixed Expenses Operating Income e) Sales Price of New Product Variable Cost New Fixed Costs

$32 $20.80 $47,600

$11.20 4,250

$160,000 $136,000 $24,000 15%

5,000 $160,000 $104,000 $56,000 $47,600 $8,400

$33 $7,000 $54,600 5,400 $178,200 $112,320 $65,880 $54,600 $11,280

$20 $14 $63,000

Units Sold: Original 5,000 New 4,000 Original 5,000 $32 $20.80 $56,000 New 4,000 $20 $14 $24,000 Total

Units Sold Revenue Variable Expense Contribution Margin Fixed Expense Operating Income f) Units Sold Revenue Variable Expense Contribution Margin Fixed Expense Operating Income g)

$80,000 $63,000 $17,000

Original 4,000 $128,000 $83,200.00 $44,800

New 5,000 $100,000 $70,000 $30,000

Total

$74,800 $63,000 $11,800

This is because there is a change in the sales mix and since each product has a different contribution margin ratio, it is only normal that the opertaing income would change.

Austin, Inc Number of Units Sold Revenues Variable Expenses Contribution Margin Fixed Expenses Operating Income Increase in Fixed Expenses Increase in Sales Volume Labor Cost Savings per Unit a) Contribution Margin Ratio Breakeven Revenues b) Sales Volume Sales Price per Unit Variable Expense per Unit Contribution Margin per Unit Contribution Margin Ratio Fixed Expense Breakeven Revenues c) Revenues Variable Expense Contribution Margin Fixed Expenses Operating Income Increase in Operating Income Operating income at 1,500 units Current Operating Income Increase in operating income due to operating leverage Increase in operating income due to additional sales d)

1,500 $840,000 $462,000 $378,000 $290,000 $88,000 $30,000 20% $28

45% $644,444

1,800 $560 $280 $280 50% $320,000 $640,000

$1,008,000 $504,000 $504,000 $320,000 $184,000 $96,000 $100,000 $88,000 $12,000 $84,000

Yes, I believe that the machine should be leased since operating income would increase as a result of the increase in the sales volume as well as the operating

Yes, I believe that the machine should be leased since operating income would increase as a result of the increase in the sales volume as well as the operating leverage.