1- What information in the income statements of the company make it especially important that you understand the company’s method of revenue recognition?
2- If the company’s inventory as of December 31, 20X2, was incorrect on the balance sheet, and if it was less than what is reported (you can assume a number), what would the dollar effect on gross profit be?
3- If costs of all elements of the company’s inventory have been increasing steadily during the three years covered by the financial statements, how does the company’s choice of inventory valuation methods affect the comparability of its gross profit margin to other food and beverage manufacturers who use LIFO to value their inventories?
4- Directions: Review the financial statements of the company and use the statements to answer the following questions.
To evaluate the company’s sales growth, what information about sales, especially components of sales, would be important to know?
Unit versus price:
Business segments
Multiple products or lines of business:
Customer segments:
Geographic markets:
Production locations:
What is your assessment of JWI’s management of cost of goods sold expense?
5- Using the following assumptions about fixed and variable expenses for the company in 20X2, what is its breakeven sales point?
• All cost of goods sold are variable
• 50% of selling expense is variable
• 50% of selling expense is fixed
• All G&A expense is fixed
• 50% of interest and factoring charges are variable
• 50% of interest and factoring charges are fixed
Total fixed costs in 20X2:
Total variable costs in 20X2:
Contribution margin in 20X2:
Breakeven sales: