Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 6,450 rackets and sold 5,130. Each racket was sold at a price of $90. Fixed overhead costs are $83,850 per year, and fixed selling and administrative costs are $66,200 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 absorption costing. ACES INCORPORATED Income Statement (Absorption Costing) Sales Cost of goods sold Gross profit Selling and administrative expenses Income $ $ 461,700 wwwwwwww 194,940: ************* 266,760 10,269 256,500 $12 8 5 2
Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 6,450 rackets and sold 5,130. Each racket was sold at a price of $90. Fixed overhead costs are $83,850 per year, and fixed selling and administrative costs are $66,200 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 absorption costing. ACES INCORPORATED Income Statement (Absorption Costing) Sales Cost of goods sold Gross profit Selling and administrative expenses Income $ $ 461,700 wwwwwwww 194,940: ************* 266,760 10,269 256,500 $12 8 5 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 6,450
rackets and sold 5,130. Each racket was sold at a price of $90. Fixed overhead costs are $83,850 per year, and fixed
selling and administrative costs are $66,200 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 absorption costing.
ACES INCORPORATED
Income Statement (Absorption Costing)
Sales
Cost of goods sold
Gross profit
Selling and administrative expenses
Income
$
$
461,700
194,940:
266,760
10,260
256,500
$ 12
8
5
2
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