.Please Complete Solution With Details 2.Final Answer Clearly Mentioned 3.Do not give solution in image format

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
1.Please Complete Solution With Details 2.Final Answer Clearly Mentioned 3.Do not give solution in image format
QUESTION 1A
Johanna Stores produce and sell sunscreen powder called the 'Protect' in
cases. Each case is sold for $80. The following information relates to the
product in the first and second quarter of 2022.
Sales
Production
QUARTER 1 QUARTER 2
35,100 units 53,550 units
42,750 units
45,900 units
Direct materials
Direct labor
Variable manufacturing overhead
Fixed selling expenses
$4.80 per unit
$4.70 per unit
$2.50 per unit
$38,250
$38,250
Variable selling expenses
$64,125
$68,850
Variable administrative expenses are 10% of sales value
Fixed administrative expenses are 25% of sales value
The budgeted production capacity for the year is 176,400 cases to be
produced evenly throughout the year with a budgeted cost of $705,600.
Assume that there will be no inventory held on January 1, 2022.
Required:
(1) Prepare profit statement for each of the two quarters using absorption
and variable costing techniques.
(2) Compute and reconcile the differences in the operating incomes of both
techniques.
(3) Comment on the differences in the operating income between both
techniques.
Transcribed Image Text:QUESTION 1A Johanna Stores produce and sell sunscreen powder called the 'Protect' in cases. Each case is sold for $80. The following information relates to the product in the first and second quarter of 2022. Sales Production QUARTER 1 QUARTER 2 35,100 units 53,550 units 42,750 units 45,900 units Direct materials Direct labor Variable manufacturing overhead Fixed selling expenses $4.80 per unit $4.70 per unit $2.50 per unit $38,250 $38,250 Variable selling expenses $64,125 $68,850 Variable administrative expenses are 10% of sales value Fixed administrative expenses are 25% of sales value The budgeted production capacity for the year is 176,400 cases to be produced evenly throughout the year with a budgeted cost of $705,600. Assume that there will be no inventory held on January 1, 2022. Required: (1) Prepare profit statement for each of the two quarters using absorption and variable costing techniques. (2) Compute and reconcile the differences in the operating incomes of both techniques. (3) Comment on the differences in the operating income between both techniques.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 8 steps with 5 images

Blurred answer
Knowledge Booster
Database design
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education