For various reasons, a single economic entity may exist in the form of a parent and several legally separate subsidiaries, often referred to as an affiliated group. Which of the following is/are true?
a. A consolidation of the financial statements of the parent and each of its subsidiaries presents the results of operations, financial position, and cash flows of an affiliated group of companies under the control of a parent as if the group of companies composed a single entity.
b. The parent and each subsidiary are legally separate entities that operate as one centrally controlled economic entity.
c. Consolidated financial statements generally provide more useful information to the shareholders of the parent corporation than do separate financial statements for the parent and each subsidiary.
d. all of the above
e. none of the above
D
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Engineworks Co. provides the following fixed budget data for the year:Sales (20,000 units) …………………………….?$600,000Cost of sales:?? Direct materials …………………………….. $200,000? Direct labor …………………………………160,000? Variable overhead …………………………..60,000? Fixed overhead ……………………………..80,000500,000Gross profit …………………………………….?$100,000Operating expenses:?? Fixed ………………………………………..$12,000? Variable …………………………………….40,000 52,000Income from operations ………………………..?$ 48,000The company's actual activity for the year follows:??Sales (21,000 units)
…………………………….?$651,000Cost of goods sold:?? Direct materials …………………………….. $231,000? Direct labor …………………………………168,000? Variable overhead …………………………..73,500? Fixed overhead ……………………………..77,500550,000Gross profit …………………………………….?$101,000Operating expenses:?? Fixed ……………………………………….12,000? Variable …………………………………….39,500 51,500Income from operations ……………………….?$ 49,500Required:Prepare a flexible budget performance report for the year using the contribution margin format. What will be an ideal response?