Taylor Corporation
Taylor Corporation Manufactures and Sells Baseball Bats Refer to Taylor Corporation

question 98

Essay

Taylor Corporation
Taylor Corporation manufactures and sells baseball bats.For a recent period,its production and sales objectives were each set at 20,000 units.Also,for this period the firm had estimated costs as follows:
$\begin{array}{ll}\text { V ariable prochuction costs } & \$ 3\text { per unit } \\\text {Variable selling costs } & \$ 2\text { per unit}\\\text {Committed fixed costs } & \$ 30,000 \text {per period}\\\text {Discretionary fixed costs } &\$ 40,000 \text {per period}\\\end{array}$


Refer to Taylor Corporation.Note that the budget for discretionary fixed costs is $40,000.If actual discretionary fixed costs were $50,000,could cost control have still been effective? Explain.

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Definitions:

Indirect Method

The indirect method is a way of calculating cash flows from operating activities for the cash flow statement by starting with net income and adjusting for changes in balance sheet accounts.

Liquidity

The simplicity of turning an asset into cash without impacting its market value.

Cash Flows From Operations

The net amount of cash generated or used by a company in its operational activities during a specific period.

Deferred Income Taxes

Represents taxes that are owed but not yet paid, due to differences in the timing of recognition of revenue and expenses for tax reporting and financial accounting purposes.