Absorption and Variable Costing Income StatementsDuring the first month of operations ended July 31, YoSan Inc. manufactured 12,000 flat panel televisions, of which 11,300 were sold. Operating data for the monthare summarized as follows:SalesManufacturing costs:Direct materialsDirect laborVariable manufacturing costFixed manufacturing costSelling and administrative expenses:VariableFixed$1,020,000300,000264,000132,000$158,20072,800$2,034,0001,716,000231,000 Required:1. Prepare an income statement based on the absorption costing concept.YoSan Inc.Absorption Costing Income StatementFor the Month Ended July 31Line Item DescriptionCost of goods sold:2. Prepare an income statement based on the variable costing concept.YoSan Inc.Variable Costing Income StatementFor the Month Ended July 31Line Item DescriptionVariable cost of goods sold:Amount AmountFixed costs:Amount Amount33. Explain the reason for the difference in the amount of operating income reported in (1) and (2).The operating income reported undercosting exceeds the operating income reported undermanufacturing costs that are deferred to a future month undercosting.costing, due to

The income statement can be prepared using various methods as absorption and variable costing. The…

Answered: Absorption and Variable Costing Income…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Franklin Modems, Inc. makes modem cards that are used In notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. 1. Acquired $820,000 of cash from the owners. 2. Purchased $305,900 of manufacturing equipment. The equipment has a $37,000 salvage value and a four-year useful life. 3. The company started and completed 5,700 modems. Direct materials purchased and used amounted to $47 per unit. 4. Direct labor costs amounted to $32 per unit. 5. The cost of manufacturing supplies used amounted to $11 per unit. 6. The company paid $57,800 to rent the manufacturing facility. 7. Franklin sold all 5,70e units at a cash price of $155 per unit. 8. The sales staff was paid a $9.50 per unit sales commission. 9. Paid $46,eee to purchase equipment for administrative offices. The equipment was expected to have a $3,700 salvage value and a three-year useful life. 10. Administrative expenses consisting of office rental and salaries…
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 Company Absorption Costing Income Statement For the Month Ended April 30 Sales (5,600 units) Cost of goods sold: Cost of goods manufactured (6,600 units) Inventory, April 30 (900 units) Total cost of goods sold Gross profit Selling and administrative expenses Operating income Variable cost of goods sold: $138,600 (18,900) Fixed costs: $162,400 If the fixed manufacturing costs were $30,492 and the fixed selling and administrative expenses were $12,600, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars. Joplin Company Variable Costing Income Statement For the Month Ended April 30 (119,700) $42,700 (25,720) $16,980
Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (23,200 x $81) $1,879,200 Manufacturing costs (23,200 units): Direct materials 1,127,520 Direct labor 266,800 Variable factory overhead 125,280 Fixed factory overhead 148,480 Fixed selling and administrative expenses 40,400 Variable selling and administrative expenses 48,800 The company is evaluating a proposal to manufacture 25,600 units instead of 23,200 units, thus creating an ending inventory of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 23,200 and 25,600 units are manufactured in the absorption costing format. If an amount box does not…
Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (17,000 units) $2,210,000 Production costs (22,000 units): Direct materials $1,058,200 Direct labor 508,200 Variable factory overhead 253,000 Fixed factory overhead 169,400 1,988,800 Selling and administrative expenses: Variable selling and administrative expenses $308,300 Fixed selling and administrative expenses 119,300 427,600 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 $fill in the blank 72b9f3f8dfebff0_2 fill in the blank…
Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (15,000 units) $2,100,000 Production costs (19,000 units): Direct materials $984,200 Direct labor 473,100 Variable factory overhead 235,600 Fixed factory overhead 157,700 1,850,600 Selling and administrative expenses: Variable selling and administrative expenses $286,800 Fixed selling and administrative expenses 111,000 397,800 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Gallatin County Motors Inc. Absorption Costing Income Statement For the Month Ended July 31 $ $ $ b. Prepare an income statement…
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (17,000 units) $2,040,000 Production costs (22,000 units): Direct materials $976,800 Direct labor 468,600 Variable factory overhead 235,400 Fixed factory overhead 156,200 1,837,000 Selling and administrative expenses: Variable selling and administrative expenses $284,700 Fixed selling and administrative expenses 110,200 394,900 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Sales $2,040000.00 Cost of goods sold fill in the blank Gross profit $620,500.00…
Absorption and variable costing income statements During the first month of operations ended July 31, YoSan Inc. manufactured 2,400 flat panel televisions, of which 2,000 were sold. Operating data for the month are summarized as follows: Sales ............................................................................................................................... $2,150,000 Manufacturing costs: Direct materials ..........................................................$960,000 Direct labor ................................................................. 420,000 Variable manufacturing cost ........................................156,000 Fixed manufacturing cost .............................................288,000 (total) $1,824,000 Selling and administrative expenses: Variable .................................................... .$204,000…
Variable costs per unit: Direct materials A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price Units in beginning inventory Units produced Units sold Units in ending inventory $ 131 0 3,320 2,890 430 $ 45 Direct labor Variable manufacturing overhead $ 15 $ 7 Variable selling and administrative expense Fixed costs: $ 19 Fixed manufacturing overhead $92,960 Fixed selling and administrative expense $28,900 The total gross margin for the month under absorption costing is:
Case #14 Hilern Inc. recorded the following data for the past month: Variable costs per unit: Direct materials Direct labour Variable manufacturing overhead Variable selling expenses $4.00 $3.20 $1.00 $0.40 For the past month, fixed manufacturing overhead was $4,000 and the selling and administrative expense was $3,600. At the beginning of the month, the company had 300 units in inventory. During the month, 2,000 units were produced and 2,100 units were sold at a selling price of $14 per unit. Required: (A) Compute the per-unit product cost using absorption costing. (B) What is the operating income (loss) using absorption costing? (C) Compute the per-unit product cost using variable costing. (D) What is the operating income (loss) using variable costing? (E) Discuss the typical reasons why a company would have inventory on-hand. (F) What is a Just-in-Time inventory system? Provide some examples of companies have adopted JIT and discuss possible reasons they would for using this…
Absorption and Variable Costing Income Statements During the first month of operations ended July 31, YoSan Inc. manufactured 2,400 flat panel televisions, of which 2,000 were sold. Operating data for the month are summarized as follows: Line Item Description Amount Amount Sales $2,150,000 Manufacturing costs: Direct materials $960,000 Direct labor 420,000 Variable manufacturing cost 156,000 Fixed manufacturing cost 288,000 1,824,000 Selling and administrative expenses: Variable $204,000 Fixed 96,000 300,000 Required: Question Content Area 1. Prepare an income statement based on the absorption costing concept. YoSan Inc.Absorption Costing Income StatementFor the Month Ended July 31 Line Item Description Amount Amount - Cost of goods sold: $- Select - Question Content Area 2. Prepare an income statement…
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 Company Absorption Costing Income Statement For the Month Ended April 30 Sales (3,700 units) $74,000 Cost of goods sold: Cost of goods manufactured (4,300 units) $60,200 Inventory, April 30 (600 units) (8,400) Total cost of goods sold (51,800) Gross profit $22,200 Selling and administrative expenses (13,480) Operating income $8,720 If the fixed manufacturing costs were $16,254 and the fixed selling and administrative expenses were $6,600, prepare an income statement according to the variable costing concept. Round all final answers to whole dollars.
Variable Costing Lindquist Company has the following information for February: Sales $690,000 Variable cost of goods sold 324,300 Fixed manufacturing costs 117,300 Variable selling and administrative expenses 62,100 Fixed selling and administrative expenses 41,400 Determine the following for Lindquist Company for the month of February: a. Manufacturing margin b. Contribution margin c. Operating income 365,700

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