Homework Help is Here – Start Your Trial Now!
Business
Accounting
Absorption and Variable Costing Comparisons: Sales Exceed Production Wright Development purchases, develops, and sells commercial building sites. As the sites are sold, they are cleared at an average cost of $8,000 per site. Storm drains and driveways are also installed at an average cost of $10,000 per site. Selling costs are 6% of sales price. Administrative costs are $600,000 per year. Two years ago, the company bought 2,000 acres of land for $7,500,000 and divided it into 200 sites of equal size. During that year, 95 sites were sold at an average price of $150,000. Last year, the company purchased and developed another 2,000 acres, divided into 200 sites. The purchase price was again $7,500,000. Sales totaled 250 sites last year at an average price of $150,000. Required a. Prepare functional income statements using absorption costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Wright Development Functional (Absorption Costing) Income Statements Comparative (in thousands, except site data) Year 1 Sales $ Cost of sales Gross profit Selling and administrative expenses Net income doss) Year 2

Absorption and Variable Costing Comparisons: Sales Exceed Production Wright Development purchases, develops, and sells commercial building sites. As the sites are sold, they are cleared at an average cost of $8,000 per site. Storm drains and driveways are also installed at an average cost of $10,000 per site. Selling costs are 6% of sales price. Administrative costs are $600,000 per year. Two years ago, the company bought 2,000 acres of land for $7,500,000 and divided it into 200 sites of equal size. During that year, 95 sites were sold at an average price of $150,000. Last year, the company purchased and developed another 2,000 acres, divided into 200 sites. The purchase price was again $7,500,000. Sales totaled 250 sites last year at an average price of $150,000. Required a. Prepare functional income statements using absorption costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Wright Development Functional (Absorption Costing) Income Statements Comparative (in thousands, except site data) Year 1 Sales $ Cost of sales Gross profit Selling and administrative expenses Net income doss) Year 2

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
icon
Concept explainers
Topic Video
Question
Please do not give solution in image format thanku
Absorption and Variable Costing Comparisons: Sales Exceed Production Wright Development purchases, develops, and sells commercial building sites. As the sites are sold, they are cleared at an average cost of $8,000 per site. Storm drains and driveways are also installed at an average cost of $10,000 per site. Selling costs are 6% of sales price. Administrative costs are $600,000 per year. Two years ago, the company bought 2,000 acres of land for $7,500,000 and divided it into 200 sites of equal size. During that year. 95 sites were sold at an average price of $150,000. Last year, the company purchased and developed another 2,000 acres, divided into 200 sites. The purchase price was again $7,500,000. Sales totaled 250 sites last year at an average price of $150,000. Required a. Prepare functional income statements using absorption costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Wright Development Functional (Absorption Costing) Income Statements Comparative (in thousands, except site data) Sales Cost of sales Gross profit Selling and administrative expenses Net income doss) 5 Year 1 $ Year 2
Transcribed Image Text:Absorption and Variable Costing Comparisons: Sales Exceed Production Wright Development purchases, develops, and sells commercial building sites. As the sites are sold, they are cleared at an average cost of $8,000 per site. Storm drains and driveways are also installed at an average cost of $10,000 per site. Selling costs are 6% of sales price. Administrative costs are $600,000 per year. Two years ago, the company bought 2,000 acres of land for $7,500,000 and divided it into 200 sites of equal size. During that year. 95 sites were sold at an average price of $150,000. Last year, the company purchased and developed another 2,000 acres, divided into 200 sites. The purchase price was again $7,500,000. Sales totaled 250 sites last year at an average price of $150,000. Required a. Prepare functional income statements using absorption costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Wright Development Functional (Absorption Costing) Income Statements Comparative (in thousands, except site data) Sales Cost of sales Gross profit Selling and administrative expenses Net income doss) 5 Year 1 $ Year 2
b. Prepare contribution income statements using variable costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Wright Development Contribution Income Statements Comparative (in thousands, except site data) Sales Variable costs Contribution margin Fixed expenses Net income (loss) $ $ Year 1 $ Year 2
Transcribed Image Text:b. Prepare contribution income statements using variable costing for each of the two years. Use a negative sign only to indicate a net loss for income. Otherwise, do not use negative signs with your answers. Wright Development Contribution Income Statements Comparative (in thousands, except site data) Sales Variable costs Contribution margin Fixed expenses Net income (loss) $ $ Year 1 $ Year 2
Expert Solution
steps

Step by step

Solved in 4 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Costing Systems
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
SEE MORE TEXTBOOKS