9-23 Variable and absorption costing. explaining operating-income differences. EntertainMeCorporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relatingto January, February, and March 2020 are as follows:JanuaryFebruaryMarchUnit data:Beginning inventoryProductionSalesVarable costs:Manufacturing cost per unit produced01501501,5001,4001,5201,3501,4001,530$ 1,000$ 1,000$ 1,000Operating (marketing) cost per unit sold300$ 300$ 800Fixed costs:Manufacturing costs$525,000$525,000$525,000Operating (marketing) costs$130,000$130,000$130,000The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixedmanufacturing cost per unit is 1,500 units. There are no price, efficiency, or spending variances. Anyproduction-volume variance is written off to cost of goods sold in the month in which it occurs.1. Prepare income statements for EntertainMe in January, February, and March 2020 under (a) variablecosting and (b) absorption costing.2. Explain the difference in operating income for January, February, and March under variable costingand absorption costing.

The provided task involves preparing income statements for EntertainMe for January, February, and…

Answered: 9-23 Variable and absorption costing.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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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
Prepare the Income statement of Cambridge Manufacturers for the year ended 31 March 2021 using the absorption costing method, INFORMATION The following information was extracted from the accounting records of Cambridge Manufacturers for the year ended 31 March 2021: Inventory on 01 April 2020 1 000 units Production for the year 30 000 units Sales for the year (at R240 per unit) 25 000 units Costs: Direct materials cost per unit R60 Direct labour cost per unit R36 Variable manufacturing overheads cost per unit R24 Variable selling and administrative costs per unit sold R12 Fixed manufacturing overhead cost R696 000 Fixed selling and administrative cost R303 200 Additional information The total manufacturing costs per unit for the year ended 31 March 2020 amounted to R130, comprising R110 for variable manufacturing costs and R20 for fixed manufacturing costs. The total selling and administrative costs per unit for the same period amounted to R10, The firs-in-first out method of inventory…
Variable Costing Income Statement On April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept: Joplin CompanyAbsorption Costing Income StatementFor the Month Ended April 30 Sales (6,600 units) $178,200 Cost of goods sold: Cost of goods manufactured (7,700 units) $146,300 Inventory, April 30 (1,100 units) (20,900) Total cost of goods sold (125,400) Gross profit $52,800 Selling and administrative expenses (32,280) Operating income $20,520 If the fixed manufacturing costs were $39,501 and the fixed selling and administrative expenses were $15,810, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars. Joplin CompanyVariable Costing Income StatementFor the Month Ended April 30 $Sales Variable cost of goods sold: $Variable cost of goods manufactured…
V. Prepare a CONTRIBUTION MARGIN (also known as variable costing) income statement given a traditional (also known as absorption costing) income statement Bruno Industries manufactures and sells a single product. The controller has prepared the following income statement for the most recent year: B C D 1 2 3 Bruno Industries Traditional Income Statement (Absorption Costing) For the Year Ended December 31 4 5 Sales revenue 6 Less: Cost of goods sold 7 Gross profit 8 Less: Operating expenses 9 Operating income $ 406,000 329,000 $ 77,000 73,000 $ 4,000 10 The company produced 8,000 units and sold 7,000 units during the year ending December 31. Fixed manufacturing overhead (MOH) for the year was $152,000, while fixed operating expenses were $62,000. The company had no beginning inventory. Requirements 1. Will the company's operating income under variable costing be higher, lower, or the same as its operating income under absorption costing? Why? 2. Prepare a variable costing income…
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Variable Costing Income Statement On April 30, the end of the first month of operations, Jopl Company prepared the following income statement, based on the absorption costing concept: Joplin Company Absorption Costing Income Statement For the Month Ended April 30 Sales (4,600 units) Cost of goods sold: Cost of goods manufactured (5,200 units) Inventory, April 30 (700 units) Total cost of goods sold Gross profit Selling and administrative expenses Operating income Joplin Company Variable Costing Income Statement For the Month Ended April 30 Variable cost of goods sold: If the fixed manufacturing costs were $29,484 and the fixed selling and administrative expenses were $12,590, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars. 1:110 $109,200 (14,700) Fixed costs: $138,000 (94,500) $43,500 (25,700) $17,800
Estimated income statements, using absorption and variable costingPrior to the first month of operations ending October 31, Marshall Inc.estimated the attached operating results: The company is evaluating a proposal to manufacture 50,000 unitsinstead of 40,000 units, thus creating an ending inventory of 10,000 units.Manufacturing the additional units will not change sales, unit variablefactory overhead costs, total fixed factory overhead cost, or total sellingand administrative expenses. a. Prepare an estimated income statement, comparing operatingresults if 40,000 and 50,000 units are manufactured in (1) theabsorption costing format and (2) the variable costing format.b. What is the reason for the difference in operating incomereported for the two levels of production by the absorption costingincome statement?
Accounting PART B Glico Wings uses FIFO actual costing system. The value of fixed manufacturing cost rate calculated at the end of the year through dividing the actual fixed manufacturing cost by the actual production units. Glico Wings sold only 1 product type called Matcha Mochi which has a selling price $3/unit. Glico Wings prepares income statement using absorption costing as below: 2021 (in $) 2022 (in $) Revenues (Price @ $3) Cost of goods sold: Beginning inventory Variable manufacturing costs Fixed manufacturing costs Cost of goods available for sale Deduct ending inventory Cost of goods sold Gross margin Operating costs: Variable operating costs Fixed operating costs Total operating costs Operating income 3000 3600 400 700 500 700 700 1400 1600 (400) (240) 1000 1360 2000 2240 1000 1200 400 400 1400 1600 600 640 Additional information 2021 2022 Production 1400 unit 1000 unit Required: 1. Prepare income statement based on variable costing for 2021 and 2022 2. Prepare a numerical…
am. 132.

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