Cool Sky reports the following for its first year of operations. The company produced 40,000 units and sold 32,000 units at a price of $140 per unit. Direct materials. Direct labor Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses $ 60 per unit $ 22 per unit $8 per unit $ 480,000 per year. $ 11 per unit $ 105,000 per year. Exercise 19-3 (Algo) Part 1b 1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Exercise 19-3 (Algo) Income statement under absorption costing and variable costing LO P1, P2
[The following information applies to the questions displayed below.]
Cool Sky reports the following for its first year of operations. The company produced 40,000 units and sold 32,000 units
at a price of $140 per unit.
Direct materials.
Direct labor
Variable overhead
Fixed overhead
Variable selling and administrative expenses
Fixed selling and administrative expenses
$ 60 per unit
$ 22 per unit
$8 per unit
$ 480,000 per year
$ 11 per unit
$ 105,000 per year.
Exercise 19-3 (Algo) Part 1b
1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing.
Income Statement (Absorption Costing)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6b4cfa66-3ca1-4a52-ab67-883b628d80d6%2F077c1522-6a11-4a93-9514-dfc21701dda7%2Fn8wxqc_processed.jpeg&w=3840&q=75)
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