Acme Parts Company

Question 1

Acme Parts Company Income Statement

For the year Ended March 31 , 2009

Revenues Net Sales (960 ,000 x 110

1 ,056 ,000

Interest Revenue

8 ,000

br 1 ,064 ,000

Expenses Cost of merchandise sold (1 ,056 ,000 x 70 ) 739 ,200

Selling Expenses (note 1 ) 73 ,680

Administrative Expenses (note 2 ) 76 ,768

Interest Expense 16 ,000

br 905 ,648

Net Income

158 ,352 Workings

Note 1 - Determination of Selling Expenses

Selling Expenses in 2008 105 ,600 p

Less : Transportation Expenses (32 ,240

Increase in miscellaneous selling expenses (3 ,200 x 10 320

Selling Expenses in 2009 73 ,680

Note 2 - Computation of Administrative Expenses

Administrative Expenses in 2008 54 ,400

Discount Allowed (1 ,056 ,000 x 2 21 ,120

Increase in Store Supplies Expenses (8 ,000 x 10 800

Increase in Office Supplies Expenses (1 ,600 x 10 160

Increase in miscellaneous administrative expenses (2 ,880 X 10 288

Administrative Expenses in 2009 76 ,768

Question 2

The envisaged Net Income for 2009 in line with the changes planned will lead to a Net Income of 138 ,352 . This is 38 ,352 higher than the net income reported for the year ended 31st March 2008 . In view of such financial figures , it is viable for the organization to undertake such changes , because a higher profitability will be achieved

Question 3

Before rushing into any drastic conclusions it is imperative to meticulously consider qualitative features , which may also affect the organization . The first concern is drawn...