A Firm Sells Two Different Products, a and A Required:
A

question 111

Essay

A firm sells two different products, A and A.Total fixed costs for this firm are $1,260,000.Additional selling prices and cost information for both products follow:
$\begin{array}{lcc} & \text { Selling } & \text { Variable } \\\underline{\text { Product } }& \underline{\text { Price per }} &\underline {\text { Costsper }} \\& \underline{\text { Unit }} & \underline{\text { Unit }} \\\mathrm{A} & \$ 72 & \$ 40 \\\mathrm{B} & 48 & 28\end{array}$ Required:
a.Calculate the contribution margin per composite unit.
b.Calculate the break-even point in units of each individual product.
c.If pretax income before taxes of $294,000 is desired, how many units of A and B must be sold?
B.For each unit of B, the firm sells two units of

Prepare adjusting journal entries to estimate bad debts based on aging analysis.

Understand the direct write-off method and its implications on the matching principle.

Calculate and interpret the accounts receivable turnover ratio.

Understand the receivables management, including the sale of receivables and estimating bad debts.

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Definitions:

Lessee

A person or entity that leases an asset from another, the lessor, under the terms of a lease agreement, gaining the right to use the asset for a specified period in exchange for regular payments.

Business Expense

Monetary outlays or costs that are necessary for a company to operate and conduct its business activities.

Leasing Arrangement

A contractual agreement where a lessor allows a lessee to use an asset in exchange for periodic lease payments.