Xyz Company Inc Profit And Loss Statement 255395

Xyz Company Inc Profit And Loss Statement

Xyz Company Inc has provided a comprehensive profit and loss statement for the year ending December 31, 20XX. The statement details sales revenue, returns and allowances, cost of sales, gross profit, various operating expenses, other income and expenses, pre-tax profit, income tax, and net profit. The report includes detailed breakdowns of expenses such as selling, operating, and depreciation costs, culminating in a net profit of $144,335, representing 8.3% of sales.

Paper For Above instruction

The primary purpose of this analysis is to interpret the financial statements provided for Xyz Company Inc and perform specific cost calculations and break-even analysis based on supplementary data. The financial statements serve as a foundation to understand the company's profitability, operational efficiency, and financial health. Additionally, practical application of managerial accounting principles will be performed by completing the schedule of cost of goods manufactured (COGM) and calculating the break-even point for JZ, a musician contemplating independent CD production. These exercises demonstrate the importance of accurate cost allocation, understanding contribution margins, and identifying critical financial thresholds for decision making.

Analysis of Cost of Goods Manufactured Schedule

The schedule of cost of goods manufactured (COGM) provides insight into the total manufacturing costs incurred during the year, including direct materials, direct labor, and manufacturing overhead. From the provided problem, we have raw materials purchases of $120,000, raw materials available for use of $148,000, and direct raw materials used totals $124,000. Manufacturing overhead is $24,000, and total manufacturing costs are $310,000. Ending work-in-process inventory is $46,000.

The detailed calculation begins with the beginning inventory, which is not explicitly provided, suggesting it is zero or not significant for this period. Raw materials used ($124,000) are determined by deducting ending raw materials inventory from the available raw materials, aligning with standard procedures. The total manufacturing costs are a sum of direct materials, direct labor, and manufacturing overhead.

Based on the provided data, the schedule of COGM should reflect these calculations: beginning raw materials inventory, raw materials purchased, raw materials available for use, less ending raw materials inventory, to find direct raw materials used. Adding direct labor and manufacturing overhead yields total manufacturing costs, which, when combined with beginning and ending inventories of work-in-process, results in the cost of goods manufactured. The final cost of goods manufactured is calculated as $306,000, indicating the total cost to produce goods during the period.

This process emphasizes the importance of accurate record-keeping and classification of costs, which are essential for reliable financial reporting and managerial decision-making. Proper understanding ensures effective budgeting, cost control, and profitability analysis.

Break-even Analysis for JZ

JZ's potential CD production involves fixed costs of $10,000, variable costs of $4.00 per unit, and an expected selling price of $12 per CD. Break-even analysis determines the minimum units and revenue needed to cover all costs, serving as a critical tool for evaluating project viability.

The contribution margin per unit is calculated by subtracting variable costs from the selling price: $12 - $4 = $8 per unit. The break-even point in units is obtained by dividing fixed costs by the contribution margin: $10,000 / $8 = 1,250 units. The total revenue at the break-even point is then 1,250 units * $12 = $15,000.

This analysis underscores the importance of understanding cost structure and sales volume in project planning. Achieving the break-even point indicates the minimum sales required for a project to be financially sustainable. For JZ, producing at least 1,250 units or generating $15,000 in revenue ensures expenses are covered, and profitability can be achieved beyond that point. Such insights are vital for investment decisions, pricing strategies, and resource allocation.

Financial Position of Xyz Company Inc

The balance sheet reveals that Xyz Company Inc's total assets amount to $369,525, financed through current assets, fixed assets, liabilities, and equity. Current assets include cash, accounts receivable, inventory, and prepaid expenses. Fixed assets comprise property, equipment, and vehicles, net of depreciation. The company's liabilities consist of current liabilities such as credit lines, accounts payable, and short-term debt, along with long-term liabilities including long-term debt and loans payable to stockholders.

The company's equity section shows common stock, paid-in capital, and retained earnings, with current year's net profit adding to retained earnings, reflecting profitability and retained profits for future growth or distribution. The balance sheet indicates a healthy equity position, with total liabilities and equity equaling total assets, following the fundamental accounting equation.

Financial analysis of the balance sheet suggests that Xyz Company Inc has a solid asset base and manageable liabilities, implying stability and potential for growth. Maintaining balanced leverage and ensuring sufficient liquidity are crucial for ongoing operational success and strategic investments.

Conclusion

In conclusion, the financial statements and supplementary cost data for Xyz Company Inc provide valuable insights into the company's operational efficiency and financial health. Accurate computation of the cost of goods manufactured underpins effective cost management, while break-even analysis assists in strategic planning. The balance sheet underscores the importance of sound financial structure and liquidity management. Collectively, these financial tools and analyses enable managers and stakeholders to make informed decisions about resource allocation, pricing, cost control, and growth strategies, ultimately contributing to the company's long-term success.

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