ACC5200/Summer2021/Chapter 2/Homework Problems Comparison of Costing Methods The Jarvis Company sells its razors at $6 per unit. The company incurs fixed manufacturing overhead costs of $1,280,000 each year to support production of 1,600,000 units so that the fixed manufacturing overhead cost per unit equals $0.8 ( 1,280,000 /1,600,000 units). The following data are related to its first 2 years of operation, all numbers are in thousands: Year 1 Year 2 Sales 1,050 units 1,300 units Production 1,600 units 1,050 units Costs Variable manufacturing $ 1,280 $ 840 Fixed manufacturing 1,280 1,280 Variable operating (marketing) Fixed operating (marketing) 900 1,200 500 500 1.Prepare income statements based on variable costing for each of the 2 years. 2.Prepare income statements based on absorption costing for each of the 2 years. 3.Prepare a numerical reconciliation and explanation of the difference between operating income for each year under absorption costing and variable costing. 4.Critics have claimed that a widely used accounting system has led to undesirable buildups of inventory levels. (a) Is variable costing or absorption costing more likely to lead to such

ACC5200/Summer2021/Chapter 2/Homework Problems Comparison of Costing Methods The Jarvis Company sells its razors at $6 per unit. The company incurs fixed manufacturing overhead costs of $1,280,000 each year to support production of 1,600,000 units so that the fixed manufacturing overhead cost per unit equals $0.8 ( 1,280,000 /1,600,000 units). The following data are related to its first 2 years of operation, all numbers are in thousands: Year 1 Year 2 Sales 1,050 units 1,300 units Production 1,600 units 1,050 units Costs Variable manufacturing $ 1,280 $ 840 Fixed manufacturing 1,280 1,280 Variable operating (marketing) Fixed operating (marketing) 900 1,200 500 500 1.Prepare income statements based on variable costing for each of the 2 years. 2.Prepare income statements based on absorption costing for each of the 2 years. 3.Prepare a numerical reconciliation and explanation of the difference between operating income for each year under absorption costing and variable costing. 4.Critics have claimed that a widely used accounting system has led to undesirable buildups of inventory levels. (a) Is variable costing or absorption costing more likely to lead to such

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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Rey Company’s single product sells at a price of $218 per unit. Data for its single product for its first year of operations follow. Direct materials $ 22 per unit Direct labor $ 30 per unit Overhead costs Variable overhead $ 8 per unit Fixed overhead per year $ 220,000 per year Selling and administrative expenses Variable $ 20 per unit Fixed $ 204,000 per year Units produced and sold 22,000 units 1. Prepare an income statement for the year using absorption costing2. Prepare an income statement for the year using variable costing.
Assume that a company produced 10,000 units and sold 8,000 units during its first year of operations. It has also provided the following information: Selling price Direct materials Direct labor Variable manufacturing overhead Sales commission Fixed manufacturing overhead Fixed selling and administrative expense Per Unit $ 240 $ 85 $ 60 $ 10 $ 11 Per Year $ ? $ 250,000 If the company's unit product cost under absorption costing is $205, then what is the amount of fixed manufacturing overhead per year?
Required information [The following information applies to the questions displayed below.] Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 6,850 rackets and sold 5,330. Each racket was sold at a price of $90. Fixed overhead costs are $89,050 per year, and fixed selling and administrative costs are $67,000 per year. The company also reports the following per unit variable costs for the year. Direct materials Direct labor Variable overhead Variable selling and administrative expenses Prepare an income statement under variable costing. ACES INCORPORATED Income Statement (Variable Costing) Sales Less: Variable expenses Variable cost of goods sold Vanable selling and administrative expenses Contribution margin Fixed overhead Fixed selling and administrative expenses 333 X x X > $ 89,050✔ 67,000 $479,700 335,790 $12 8 5 2 156,050 Income $ 179,740 "Red text indicates no response was expected in a cell or a formula-based calculation is…
Required information [The following information applies to the questions displayed below.] Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Average Cost per Unit $ 7.00 $ 4.00 $ 1.50 $ 5.00 $ 3.50 $ 2.50 $ 1.00 $ 0.50 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense
Required information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $75 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 46,000 units and sold 42,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 644,000 $ 388,000 The company sold 31,000 units in the East region and 11,000 units in the West region. It determined that $200,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $38,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it…
Provide table
Yancey, Inc reports the following information Units produced Units sold Sales poce Direct materials Direct labor 520 units 520 units $150 per unit $40 per unit $30 per unit Variable manufacturing overhead Fixed manufacturing overhead $20 per unit $24,000 per year $15 per unit Variable selling and administrative costs Fixed selling and administrative costs $25,000 per year What is the amount of unit product cost that will be considered for external reporting purposes? (Round any intermediate calculations and your final answer to the nearest cent) OA. $76 15 OB 5136 15 OC. $116 15 OD $80.00
T3.
Required information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $71 per unit in two geographic regions-East and West. The following information pertains to the company's first year of operations in which it produced 54,000 units and sold 49,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 22 $ 12 $3 $5 The company sold 36,000 units in the East region and 13,000 units in the West region. It determined that $280,000 of its fixed selling and administrative expense is traceable to the West region, $230,000 is traceable to the East region, and the remaining $76,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce…
2. A company manufacturing two products furnishers the following data for a year: Product Annual Total Total number Total number Output (units) machine of purchase of set ups hours orders A 100 500 50 5 B 75 700 40 10 175 1200 90 15 The annual overheads are as under: Volume related activity costs RO 20000 Set up related costs RO 15000 Purchase related costs RO 35000 Total RO 70000 You are required to calculate the cost per unit of each product A and B based on: a. Traditional method of charging overheads b. Activity based costing method 本本本本本本**本本本本本本本*
[The following information applies to the questions displayed below] Diego Company manufactures one product that is sold for $80 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 40,000 units and sold 35,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $24 $14 $2 $4 $ 800,000 $ 496,000 The company sold 25,000 units in the East region and 10,000 units in the West region. It determined that $250,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $96,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to…