Basic Electric Motors is a division of Basic Electric Products Corporation. The division manufactures and sells an electric switch used in a wide variety of applications. During the coming year, it expects to sell 190,000 units for $7 per unit. Ester Madden is the division manager. She is considering producing either 190,000 or 240,000 units during the period. Other information is as follows: Beginning inventory Expected sales in units Selling price per unit Variable manufacturing cost per unit Fixed manufacturing cost (total) Fixed manufacturing overhead costs per unit Based on 190,000 units Based on 240,000 units Manufacturing cost per unit Based on 190,000 units Based on 240,000 units Variable selling and administrative expenses Fixed selling and administrative expenses (total) Units produced Units sold Division Information for 2020 Sales Less V 0 Cost of goods sold V 190,000 $7 Prepare an absorption-costing income statement, with one column showing the results if 190,000 units are produced and one column showing the results if 240,000 units are produced. $2.00 $456,000 $2.40 per unit ($456,000+ 190,000) $1.90 per unit ($456,000+240,000) $4.40 per unit ($2.00 variable + $2.40 fixed) $3.90 per unit ($2.00 variable + $1.90 fixed) $0.35 per unit $11,600 BASIC ELECTRIC MOTORS DIVISION Income Statement For the Year Ended 2020 Absorption Costing S 240,000 190000 1330000 $ 190,000 190000 1330000
Basic Electric Motors is a division of Basic Electric Products Corporation. The division manufactures and sells an electric switch used in a wide variety of applications. During the coming year, it expects to sell 190,000 units for $7 per unit. Ester Madden is the division manager. She is considering producing either 190,000 or 240,000 units during the period. Other information is as follows: Beginning inventory Expected sales in units Selling price per unit Variable manufacturing cost per unit Fixed manufacturing cost (total) Fixed manufacturing overhead costs per unit Based on 190,000 units Based on 240,000 units Manufacturing cost per unit Based on 190,000 units Based on 240,000 units Variable selling and administrative expenses Fixed selling and administrative expenses (total) Units produced Units sold Division Information for 2020 Sales Less V 0 Cost of goods sold V 190,000 $7 Prepare an absorption-costing income statement, with one column showing the results if 190,000 units are produced and one column showing the results if 240,000 units are produced. $2.00 $456,000 $2.40 per unit ($456,000+ 190,000) $1.90 per unit ($456,000+240,000) $4.40 per unit ($2.00 variable + $2.40 fixed) $3.90 per unit ($2.00 variable + $1.90 fixed) $0.35 per unit $11,600 BASIC ELECTRIC MOTORS DIVISION Income Statement For the Year Ended 2020 Absorption Costing S 240,000 190000 1330000 $ 190,000 190000 1330000
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Basic Electric Motors is a division of Basic Electric Products Corporation. The division manufactures and sells an electric switch used
in a wide variety of applications. During the coming year, it expects to sell 190,000 units for $7 per unit. Ester Madden is the division
manager. She is considering producing either 190,000 or 240,000 units during the period. Other information is as follows:
Beginning inventory
Expected sales in units
Selling price per unit
Variable manufacturing cost per unit
Fixed manufacturing cost (total)
Fixed manufacturing overhead costs per unit
Based on 190,000 units
Based on 240,000 units
Manufacturing cost per unit
Based on 190,000 units
Based on 240,000 units
Variable selling and administrative expenses
Fixed selling and administrative expenses (total)
Units produced
Units sold
Sales
Less V
Division Information for 2020
Gross profit
Less 7
Net Income
Prepare an absorption-costing income statement, with one column showing the results if 190,000 units are produced and one
column showing the results if 240,000 units are produced.
Cost of goods sold
0
190,000
Selling and administrative expenses
$7
$2.00
$456,000
$2.40 per unit ($456,000+ 190,000)
$1.90 per unit ($456,000+ 240,000)
$4.40 per unit ($2.00 variable + $2.40 fixed)
$3.90 per unit ($2.00 variable + $1.90 fixed)
$0.35 per unit
$11,600
BASIC ELECTRIC MOTORS DIVISION
Income Statement
For the Year Ended 2020
Absorption Costing
S
$
240,000
190000
1330000
S
190,000
190000
1330000
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