Absorption and variable costing Bird's Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for variable overhead. The company's annual fixed overhead cost is $1,050,000; it uses expected capacity of 17,500 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are $252,000. The following additional information is available: Year 1 Year 2 Selling price per unit $500 $500 Number of units sold 14,000 16,800 Number of units produced 17,500 15,400 Beginning inventory (units) 10,500 14,000 Ending inventory (units) 14,000 ? a. Prepare pre-tax income statements under absorption and variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of Goods Sold. Note: Do not use negative signs in your answers. Bird's Eye View Income Statements (Absorption) For the Years Ended December 31, Year 1 and Year 2 Year 1 Year 2 Sales $ CGS 2$ 2$ Underapplied FOH Gross profit 2$ $ S&A: Variable 2$ Fixed Income before taxes $ b. Prepare pre-tax income statements under variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of Goods Sold. Note: Do not use negative signs in your answers. Bird's Eye View Income Statements (Variable) For the Years Ended December 31, Year 1 and Year 2 Year 1 Year 2 Sales $ $ CGS Product CM 2$ 2$ Variable S&A Total CM $ $ Fixed costs: Factory 2$ 2$ S&A Income before taxes $ $ %24
Absorption and variable costing Bird's Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for variable overhead. The company's annual fixed overhead cost is $1,050,000; it uses expected capacity of 17,500 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are $252,000. The following additional information is available: Year 1 Year 2 Selling price per unit $500 $500 Number of units sold 14,000 16,800 Number of units produced 17,500 15,400 Beginning inventory (units) 10,500 14,000 Ending inventory (units) 14,000 ? a. Prepare pre-tax income statements under absorption and variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of Goods Sold. Note: Do not use negative signs in your answers. Bird's Eye View Income Statements (Absorption) For the Years Ended December 31, Year 1 and Year 2 Year 1 Year 2 Sales $ CGS 2$ 2$ Underapplied FOH Gross profit 2$ $ S&A: Variable 2$ Fixed Income before taxes $ b. Prepare pre-tax income statements under variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of Goods Sold. Note: Do not use negative signs in your answers. Bird's Eye View Income Statements (Variable) For the Years Ended December 31, Year 1 and Year 2 Year 1 Year 2 Sales $ $ CGS Product CM 2$ 2$ Variable S&A Total CM $ $ Fixed costs: Factory 2$ 2$ S&A Income before taxes $ $ %24
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I need help with the following cost accounting question. Thanks.
Transcribed Image Text:Absorption and variable costing
Bird's Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the
following costs apply: $50 for direct material, $100 for direct labor, and $60 for variable overhead. The company's annual fixed overhead cost is $1,050,000;
it uses expected capacity of 17,500 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is
paid on each unit sold. Annual fixed selling and administrative expenses are $252,000. The following additional information is available:
Year 1 Year 2
Selling price per unit
$500
$500
Number of units sold
14,000 16,800
Number of units produced 17,500 15,400
Beginning inventory (units) 10,500 14,000
Ending inventory (units)
14,000
?
a. Prepare pre-tax income statements under absorption and variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of
Goods Sold.
Note: Do not use negative signs in your answers.
Bird's Eye View
Income Statements (Absorption)
For the Years Ended December 31, Year 1 and Year 2
Year 1
Year 2
Sales
$
CGS
2$
2$
Underapplied FOH
Gross profit
2$
$
S&A:
Variable
2$
Fixed
Income before taxes
$
b. Prepare pre-tax income statements under variable costing for Year 1 and Year 2, with any volume variance being charged to Cost of Goods Sold.
Note: Do not use negative signs in your answers.
Bird's Eye View
Income Statements (Variable)
For the Years Ended December 31, Year 1 and Year 2
Year 1
Year 2
Sales
$
$
CGS
Product CM
2$
2$
Variable S&A
Total CM
$
$
Fixed costs:
Factory
2$
2$
S&A
Income before taxes
$
$
%24
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