Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced5,600 rackets and sold 4,500. Each racket was sold at a price of $86. Fixed overhead costs are $70,560 forthe year, and fixed selling and administrative costs are $64,800 for the year. The company also reports thefollowing per unit variable costs for the year:Direct materialsDirect laborVariable overheadVariable selling and administrative expensesRequired:Prepare an income statement under absorption costing.ACES INCORPORATEDIncome Statement (Absorption Costing)SalesCost of goods soldGross profitSelling and administrative expensesIncome$$387,000387,000$ 387,000$ 11.887.884.841.60

The net income is calculated as difference between sales and total costs. The income statement can…

Answered: Aces Incorporated, a manufacturer of…

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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Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its standard cost information for last year follows: Direct materials (plastic) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($461,000 +922,000 units) Parker Plastic had the following actual results for the past year: Number of units produced and sold Number of square feet of plastic used Cost of plastic purchased and used Number of labor hours worked Direct labor cost S Variable overhead cost Fixed overhead cost 1,160,000 12,000,000 $ 16,800,000 320,000 $ 3,744,000 $ 1,100,000 $377,000 Standard Quantity 12 square foot 0.3 hour Standard Price (Rate) $ 1.45 per square foot $ 11.90 per hour Standard Unit Cost $ 17.40 3.57 0.3 hour $ 2.30 per hour 0.69 0.50 Required: Calculate Parker Plastic's direct materials price and quantity variances. Note: Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for…
XYZ Company incurred the following costs for the month of August when it observed an activity level of 5,000 units Vanable co 532.500 Fixed costs $25,000; Mixed costs $21,500, Total costs $79,000. During October, the activity level was 16,000 units and the cnts incurred were $178,000 If the activity level were expected to be 7,000 units for the month of December, what amount of al costs would be expected? Select one DaS106,000 Ob$124,000 Oc None of the answers given a S115.000 S97.000
Variable and Absorption CostingChandler Company sells its product for $108 per unit. Variable manufacturing costs per unit are $49, and fixed manufacturing costs at the normal operating level of 12,000 units are $240,000. Variable selling expenses are $17 per unit sold. Fixed administrative expenses total $104,000. Chandler had no beginning inventory for the year. During the year, the company produced 12,000 units and sold 9,000. Would net income for Chandler Company be higher if calculated using variable costing or using absorption costing?Calculate reported income using each method.Do not use negative signs with any answers.
[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…
Al-Can Products, Inc. estimates that it will build 5,000 benches next year. For this amount of production, total factory overhead is estimated to be $123,456.00. Estimated direct labor costs for next year are $256,190.00. Calculate the factory overhead applied rate for next year as a percentage of direct labor costs.
The Alphonse Company allocates fixed overhead costs by machine hours and variable overhead costs by direct labor hours. At the beginning of the year the company expects fixed overhead costs to be $600,000 and variable costs to be $800,000. The expected machine hours are 6,000 and the expected direct labor hours are 80,000. The actual fixed overhead costs are $700,000 and the actual variable overhead costs are $750,000. The actual machine hours during the year are 5,500 and the actual direct labor hours are 90,000.a. How much overhead is allocated?b. What is the over/underabsorbed overhead?
Peter Ltd manufactures and sells batteries. The cost data for the product are given below. The accountant told the President that he will prepare two different sets of income statements for thePresident’s review. The data are given as follows: Variable cost: Direct materials $6Direct labor $12Variable overhead $4Variable selling and administrative $3 Fixed cost per month: Fixed manufacturing overhead $240,000Fixed selling and administrative $180,000 The batteries sell for $40 per unit. Production and sales data for January are shown below. Units produced 30,000Units sold 26,000 Required:a. Prepare the absorption costing income statement.b. Prepare the variable costing income statement.c. Explain to the President the differences between the two income statements (if any) and the net income figures he should rely on.
Copland Components manufactures an electronic device for vehicle manufacturing. The current standard cost sheet for a device follows: Direct materials, ? ounces at $2.80 per ounce Direct labor, 0.4 hours at ? per hour Overhead, 0.4 hours at ? per hour Total costs $ ? per device ? per device ?per device $ 30 per device Assume that the following data appeared in Copland's records at the end of the past month: Actual production Actual sales Materials costs (505,000 ounces) Materials price variance Materials efficiency variance 96,000 units 90,000 units $ ? 63,000 U 70,000 U Direct labor price variance Direct labor (37,500 hours) Overapplied overhead (total) There are no materials Inventories. Required: 18,750 F 918,750 25,200 a. Prepare a variance analysis for direct materials and direct labor. b. Assume that all production overhead is fixed and that the $25,200 overapplied is the only overhead variance that can be computed. What are the actual and applied overhead amounts? c. Complete…
Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: 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 expenses During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $52 per unit. Required: 1. Compute the company's break-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for…
Namco Inc. is a large company that segments its business into cost and profit centers. The Cost center for the manufacture of Product M2T incurred the following costs in October: Direct Labor: $25/unit Direct Materials: $80/unit Variable Overhead: $15/unit Traceable Fixed Costs: $62,000 Common Fixed Costs: $100,000 Sales were 2,000 units in October. Each unit sells for $210. The M2T Department is being evaluated on overall profitability. In September, the department margin was $100,000. By how much did the department margin increase or decrease in October? Select one: a. $100,000 decrease b. $18,000 increase c. $82,000 decrease d. $118,000 increase e. $80,000 increase
Rahul
[The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $77 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 59,000 units and sold 54,000 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 $ 27 $ 10 $2 $3 $ 1,298,000 $ 662,000 The company sold 41,000 units in the East region and 13,000 units in the West region. It determined that $330,000 of its fixed selling and administrative expense is traceable to the West region, $280,000 is traceable to the East region, and the remaining $52,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it…

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