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(Assume that selling and administrative expenses are associated with goods sold.) Levine sells its products for $216 per unit. Required a. Prepare income statements based on absorption costing for Year 2 and Year 3. b. Since Levine sold the same number of units in Year 2 and Year 3, why did net income increase in Year 3? d. Determine the costs of ending inventory for Year 3.

(Assume that selling and administrative expenses are associated with goods sold.) Levine sells its products for $216 per unit. Required a. Prepare income statements based on absorption costing for Year 2 and Year 3. b. Since Levine sold the same number of units in Year 2 and Year 3, why did net income increase in Year 3? d. Determine the costs of ending inventory for Year 3.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 10E: SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that...
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Levine Manufacturing pays its production managers a bonus based on the company's profitability. During the two most recent years, the company maintained the same cost structure to manufacture its products. Units Year Produced Units Sold Production and Sales Year 2 4,000 4,000 4,000 Year 3 6,000 Cost Data 30 per unit 48 per unit 24 per unit Direct materials $ Direct labor $ Manufacturing overhead-variable Manufacturing overhead-fixed Variable selling and administrative expenses Fixed selling and administrative expenses $216,000 $ 18 per unit sold $120,000 (Assume that selling and expenses are with goods sold.) Levine sells its products for $216 per unit. Required a. Prepare income statements based on absorption costing for Year 2 and Year 3. b. Since Levine sold the same number of units in Year 2 and Year 3, why did net income increase in Year 3? d. Determine the costs of ending inventory for Year 3. e. Prepare income statements based on variable costing for Year 2 and Year 3.
Transcribed Image Text:Levine Manufacturing pays its production managers a bonus based on the company's profitability. During the two most recent years, the company maintained the same cost structure to manufacture its products. Units Year Produced Units Sold Production and Sales Year 2 4,000 4,000 4,000 Year 3 6,000 Cost Data 30 per unit 48 per unit 24 per unit Direct materials $ Direct labor $ Manufacturing overhead-variable Manufacturing overhead-fixed Variable selling and administrative expenses Fixed selling and administrative expenses $216,000 $ 18 per unit sold $120,000 (Assume that selling and expenses are with goods sold.) Levine sells its products for $216 per unit. Required a. Prepare income statements based on absorption costing for Year 2 and Year 3. b. Since Levine sold the same number of units in Year 2 and Year 3, why did net income increase in Year 3? d. Determine the costs of ending inventory for Year 3. e. Prepare income statements based on variable costing for Year 2 and Year 3.
Complete this question by entering your answers in the tabs below. Req A Year 2 Req A Year 3 Req B Req D Req E Year 2 Reg E Year 3 Prepare income statements based on absorption costing for Year 2. (Do not round intermediate calculations.) LEVINE MANUFACTURING Absorption Costing Income Statement For the Year Ended Dec. 31, Year 2 Cost of Goods Sold: $ < Req A Year 2 Req A Year 3 >
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Req A Year 2 Req A Year 3 Req B Req D Req E Year 2 Reg E Year 3 Prepare income statements based on absorption costing for Year 2. (Do not round intermediate calculations.) LEVINE MANUFACTURING Absorption Costing Income Statement For the Year Ended Dec. 31, Year 2 Cost of Goods Sold: $ < Req A Year 2 Req A Year 3 >
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