18eBookHayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares the income statementunder absorption costing for external reporting. For its first month of operations, 425 bikes were produced and 255 were sold. Incomestatement information under variable costing follows.Sales (255 $1,800)Variable cost of goods sold (255 $675)Variable selling and administrative expenses (255 $65)Contribution marginFixed overheadFixed selling and administrative expensesIncomePrepare the company's income statement under absorption costing.HAYEK BIKESIncome Statement (Absorption Costing)00$ 459,000172,12516,575270, 30085,00095,000$ 90,300

ABSORPTION COSTINGAbsorption Costing is a Cost Management Accounting method in which all costs…

Answered: 18 eBook Hayek Bikes prepares the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $62 per unit) Year 1 $ 1,178,000 Gross margin 513,000 Selling and administrative 303,000 expenses* Net operating $ income Cost of goods sold (@$35 665,000 1,015,000 per unit) Year 2 210,000 $ 1,798,000 783,000 333,000 $ 450,000 *$3 per unit variable; $246,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($360,000 ÷ 24,000 units) Absorption costing unit product cost $9 9 2 15 $ 35
Part 2: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Full Variable tab), complete thecalculations listed below.• Calculate the value of ending inventory under full or absorption costing.• Calculate the value of ending inventory under variable costing.Which method you think is more helpful to managers and why. Cookie Business Productions Costs: Direct material $ 0.60 Direct labor $ 1.00 Variable manufacturing overhead $ 0.40 Total variable manufacturing costs per unit $ 2.00 Fixed manufacturing overhead per year $ 139,000.00 In addition, the company has fixed selling and administrative costs: Fixed selling costs per year $ 50,000.00 Fixed administrative costs per year $ 65,000.00 Selling price per cookie $ 3.75 Number of cookies produced 2,780,000 Number of cookies sold 2,600,000 Full (absorption) costing : Full…
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (70,400 units) during the first month, creating an ending inventory of 6,400 units. During February, the company produced 64,000 units during the month but sold 70,400 units at $90 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Manufacturing costs in February 1 beginning inventory: Variable Fixed Total Manufacturing costs in February: Variable Fixed Total Selling and administrative expenses in February: Variable Fixed Total Number of Units Cost of goods sold: 6,400 $36.00 6,400 14.00 64,000 64,000 Unit Cost 70,400 70,400 Total Cost $230,400 89,600 $50.00 $320,000 $36.00 $2,304,000 15.40 985,600 $51.40 $3,289,600 $18.20 $1,281,280 7.00 492,800 $25.20 $1,774,080 a. Prepare an income statement according to the absorption…
roduct Cost Method of Product Costing MyPhone, Inc., uses the product cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 5,160 units of cell phones are as follows: Variable costs: Fixed costs: Direct materials $90 per unit Factory overhead $199,200 Direct labor 31 Selling and admin. exp. 70,300 Factory overhead 23 Selling and admin. exp. 22 Total variable cost per unit $166 per unit MyPhone desires a profit equal to a 13% rate of return on invested assets of $600,800. a. Determine the amount of desired profit from the production and sale of 5,160 units of cell phones.$fill in the blank 1 b. Determine the product cost per unit for the production of 5,160 of cell phones. If required, round your answer to nearest dollar.$fill in the blank 2 per unit c. Determine the product cost markup percentage (rounded to two decimal places) for cell phones.fill in the blank 3 % d.…
Dowell Company produces a single product. Its Income under variable costing for its first two years of operation follow. Variable Costing Income Income Units Units produced Units sold Additional Information a. Sales and production data for these first two years follow. Year 1 $ 43,000 Year 1 44,300 33,000 Direct materials Direct labor Variable overhead Fixed overhead ($430,000/43,000 units) Total product cost per unit Variable costing income Year 2 b. The company's $32 per unit product cost (for both years) using absorption costing consists of the following. Absorption costing income 44,300 55,600 Year 2 $ 610,000 Required: Prepare a statement to convert variable costing income to absorption costing income for both years. (Leave no cells blank - be certain to enter "0" wherever required.) $6 Dowell Company Convert Variable Costing Income to Absorption Costing Income Year 1 $ 9 7 10 $32 43,000 $ Year 2 610,000
ASSIGNMENT 1. Enusah Motors Limited assembles and sells motor vehicles. It uses an actual costing system, in which unit costs are calculated on a monthly basis. The selling price per motor vehicle is ¢44,000. Data relating to January, February and March of 2020 are: January February March Unit data: Production (units) Sales (units) 1000 1000 900 900 1040 940 100 60 20 Variable-cost data: Manufacturing costs per unit produced Selling and Admin costs per unit sold ¢16,000 ¢16,000 ¢16,000 8,000 8,000 8,000 Fixed-cost data Manufacturing costs Selling and Admin costs ¢2,400,000 ¢2,400,000 ¢2,400,000 ¢1,600,000 ¢1,600,000 ¢1,600,000 Required: Compute the product cost per unit under both variable and absorption costing methods i. ii. Present income statements for Enusah Motors in January, February and March of 2020 under Variable costing Absorption costing. а. b. iii. Reconcile and explain the differences in operating profits under both costing methods
S ipped Book erences Kunkel Company makes two products and uses a conventional costing system in which a single plantwide predetermined overhead rate is computed based on direct labor-hours. Data for the two products for the upcoming year follow: Mercon $ 10.00 Direct materials cost per unit Direct labor cost per unit Direct labor-hours per unit Number of units produced $ 3.00 0.20 10,000 These products are customized to some degree for specific customers. Wurcon $ 8.00 $ 3.75 0.25 40,000 Required: 1. The company's manufacturing overhead costs for the year are expected to be $336,000. Using the company's conventional costing system, compute the unit product costs for the two products. 2. Management is considering an activity-based costing system in which half of the overhead would continue to be allocated on the basis of direct labor-hours and half would be allocated on the basis of engineering design time. This time is expected to be distributed as follows during the upcoming year: 1.…
! Required information Exercise 19-3 (Algo) Income statement under absorption costing and variable costing LO P1, P2 [The following information applies to the questions displayed below.] Cool Sky reports the following for its first year of operations. The company produced 42,000 units and sold 34,000 units at a price of $150 per unit. Direct materials Direct labor Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses Exercise 19-3 (Algo) Part 2b Income 2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing. $ 66 per unit $ 25 per unit $9 per unit $546,000 per year. $ 12 per unit $ 100,000 per year Income Statement (Variable Costing)
Ch The following information pertains to the first year of operation for Crystal Cold Coolers Inc.: Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($182,000/2,800 units) Total variable selling expenses ($14 per unit sold) Total fixed general and administrative expenses 2,800 2,500 350 55 60 13 65 $ $35,000 $ 61,000 Required: Prepare Crystal Cold's full absorption costing income statement and variable costing income statement for the year. Complete this question by entering your answers in the tabs below. Full Absorption Costing Variable Costing Prepare Crystal Cold's full absorption costing income statement for the year. CRYSTAL COLD COOLERS INC. Full Absorption Costing Income Statement Less: Cost of Goods Sold Gross Margin Less: Non-Manufacturing Expenses Net Operating Income
A company has the following overhead costs and activities: Estimated Expected Activity Product V Product W Product X Overhead Activities and Activity Measures Machine setups (setups) Processing customer orders (orders) Assembling products (assembly-hours) $9,178.00 Cost S7,234.50 $3,565.50 69 12 10 20 21 492 697 111 4. A company sells two products, one with sales of $10,000 and variable expenses of $2,500, another with sales of $46,000 and variable expenses of $15,420. Fixed expenses are $33,100. Breakeven point for the whole company is close to: А. 833,100 В. $22,900 C. $51,020 D. $48,676 A company that reduces the proportion of variable costs in its cost structure will: A. enjoys higher stability in profits. B. increase its profits more when the economy is good. C. have a loss more easily when the economy is bad. D. be indifferent. 5. 6. is normally recorded on any financial statement but irrelevant in decision making which is not. A. Sunk cost B. Incremental cost C. Differential…
As a new accountant of the company, you are provided with the following information related to KOKO: Product Annual production and sales unit Direct material cost per unit Direct labour cost per unit Machine hours per unit Selling price per unit Koko 5,500 RM50 RM35 3 hours RM150 The company is considering of changing the traditional method to the Activity Based Costing (ABC) method. In order to adopt ABC method the following information is required: Activity Cost Cost Driver Pool Expected overhead Expected use of drivers per product Other products 3,500 costs Коко (RM) No of purchase orders Machine hours Maintenance Maintenance hours Number of inspections Total Purchasing 4,000 37,500 Machining 16,500 8,000 1,500 147,000 43,000 3,500 Quality control 1900 1600 17,500 245,000 Required: a. If the company decided to use the Activity Based Costing (ABC) method, determine the cost per unit of KOKO. Based on your answer in (a), advise whether the company should change to ABC method. Support…
Question 4: Activity Based Costing (ABC) The Gadget Co produces three products, A, B and C, all made from the same material. Until now, it has used traditional absorption costing to allocate overheads to its products. The company is now considering an activity based costing system in the hope that it will improve profitability. Information for the three products for the last year is as follows: Production and sales volumes (units) Selling price per unit Raw material usage (kg) per unit Direct labour hours per unit Machine hours per unit Number of production runs per annum Number of purchase orders per annum Number of deliveries to retailers per annum A 15,000 B 12,000 C 18,000 $7.50 $12 $13 2 3 4 0-1 0-15 0-2 0-5 0-7 0.9 16 12 8 24 28 42 48 30 62 The price for raw materials remained constant throughout the year at $1.20 per kg. Similarly, the direct labour cost for the whole workforce was $14.80 per hour. The annual overhead costs were as follows: Machine set up costs Machine running…

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS