Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells25,125 tons of its granular. Because of this year's mild winter, projected demand for its product is only 20.100 tons. Based on projectedproduction and sales of 20.100 tons, the company estimates the following income using absorption costing.Sales (20,100 tons at $148 per ton)Cost of goods sald (20,100 tons at 360 per ton)Gross profitSelling and administrative expensesIncomeIts product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensiveequipmentDirect materialsDirect laborVariable overheadFixed overhead ($884,098/28,100 tons)Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling andadministrative expenses of $213,400 per year. The company's president will not earn a bonus unless a positive income is reported.The controller mentions that because the company has large storage capacity, it can report a positive income by setting production atthe usual 25,125 ton level even though it expects to sell only 20.100 tons. The president is surprised that the company can reportincome by producing more without increasing sales.Required:1. Prepare an income statement using absorption costing based on production of 25,125 tons and sales of 20,100 tons. Can thecompany report a positive income by increasing production to 25,125 tons and storing the 5,025 tons of excess production inInventory?2. By how much does income increase by when producing 25,125 tons and storing 5,025 tons in inventory compared to onlyproducing 20,100 tons?Required 1Required 2Complete this question by entering your answers in the tabs below.BLAZER CHEMICALIncome Statement (Absorption Costing)SalesCost of goods soldGross profitSelling general and administrative expensesIncomePrepare an income statement using absorption costing based on production of 25,125 tons and sales of 20,100 tons. Can thecompany report a positive income by increasing production to 25,125 tons and storing the 5,025 tons of excess production ininventory?Note: Round your answers to the nearest whole dollar.Did the company report a positive income?$ 1,540,0001,206,000394,090334,030$8$ 13 per ton$4 per ton$3 per ton5 48 per tonRequired 1 Required 2SAnswer is not complete.Increase in incomeYes100Complete this question by entering your answers in the tabs below.Answer is not complete.By how much does income increase by when producing 25,125 tons and storing 5,025 tons in inventory compared to onlyproducing 20,100 tons?Show less# 15

Absorption costing income statement is the traditional method of representation of income statement.…

Answered: Blazer Chemical produces and sells an…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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he production cost information for Blossom's Salsa is as follows: Blossom's Salsa Production Costs April 2020 Production 23,000 Jars of Salsa Ingredient cost (variable) $13, 800 Labor cost (variable ) 9,660 Rent (fixed) 4, 300 Depreciation (fixed) 6,000 Other (fixed) 1,400 Total $35, 160 The company is currently producing and selling 345,000 jars of salsa annually. The jars sell for $7.00 each. The company is considering lowering the price to $6.30. Suppose this action will increase sales to 391, 000 jars. What is the incremental cost associated with producing an extra 46, 000 jars of salsa?
B. Hygienics Co produces free-standing sanitiser units for domestic and commercial use. They produce a single product in a highly competitive market. They have gathered the following expected information for the year 2021: £Selling price (per unit) Direct materials (per unit)Direct labour (per unit) 155.00 60.25 30.50Other costs are estimated for the year 2021 based on the expected sales of 62,000 units. These costs are given below: Fixed Costs Variable CostsOperating Costs 420,000 1,750,000Marketing Costs 350,000 122,500Storage Costs 570,000 101,000Administration Costs 232,000 - For the year 2021, you are required to calculate: a) the expected profit or loss b) breakeven point in units and sales revenue c) margin of safety in units and % change d) the profit/loss if the selling price is increased by 5% and sales quantity decreases by 50% e) the revised break-even point in units for (d)
Preston products produces a disinfecting liquid. The liquid is sold in one gallon containers and has the following price and cost characteristics. Sales Price: $36.00 per gallon Variable costs: $12.00 per gallon Fixed costs: 504,000 per month Preston products is subject to an income tax rate of 21 percent. a. How many gallons must Preston products sell every month to break even? b. How many gallons must Preston products sell to earn a monthly operating profit of $75,840 after taxes?
A manufacturer of ovens sells them for $1,370.00 each. The variable costs are $1,020.00 per unit. The manufacturer's factory has annual fixed costs of $2,460,000.00. Given the expected sales volume of 3,700 units for this year, what will be this year's net income? Round to two decimal places
Barkov Bakeries produces deluxe muffins in its manufacturing facility in Florida. Data concerning these products appear below. Cornbread Blueberry Plain Normal annual sales volume 200,000 300,000 500,000 Unit selling price $ 2.50 $ 3.00 $ 2.00 Variable cost per unit $ 1.80 $ 2.00 $ 1.40 Total fixed expenses for the entire company are $2,500,000 per year. All three products are sold in highly competitive markets, so the company is unable to raise its prices without losing unacceptable numbers of customers. The company has no work in process or finished goods inventories due to an extremely effective just-in-time manufacturing system.…
Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 20,000 tons of its granular. Because of this year’s mild winter, projected demand for its product is only 15,000 tons. Based on projected production and sales of 15,000 tons, the company estimates the following income using absorption costing. Sales (15,000 tons at $80 per ton) $ 1,200,000 Cost of goods sold (15,000 tons at $60 per ton) 900,000 Gross profit 300,000 Selling and administrative expenses 300,000 Income $ 0 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials $ 13 per ton Direct labor $ 4 per ton Variable overhead $ 3 per ton Fixed overhead ($600,000/15,000 tons) $ 40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative…
This year, Lambert Company will ship 1,500,000 pounds of goods to customers ata cost of $1,200,000. If a customer orders 10,000 pounds and produces $200,000 ofrevenue (total revenue is $20 million), the amount of shipping cost assigned to thecustomer by using ABC would bea. unable to be determined.b. $8,000 ($0.80 per pound shipped).c. $24,000 (2% of the shipping cost).d. $12,000 (1% of the shipping cost).e. None of these.
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Assume that the company expects sales of each product to increase to 64,000 units next year with no change in unit sales price. Prepare forecasted financial results for next year following the format of the contribution margin income statement shown with columns for each of the two products (assume a 32% tax rate). Letter Co. produces and sells two products, T and O. It manufactures these products in separate factories and markets them through different channels. They have no shared costs. This year, the company sold 50,000 units of each product. Sales and costs for each product follow.

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