Dance Creations manufactures authentic Hawaiian hula skirts that are purchased for traditional Hawaiian celebrations, costume parties, and other functions. During its first year of business, the company incurred the following costs: Variable Cost per Hula Skirt Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed Costs per Month Fixed manufacturing overhead Fixed selling and administrative expenses $10.55 4.35 1.50 0.45 $ 19,550 5,900 Dance Creations charges $35 for each skirt that it sells. During the first month of operation, it made 1,880 skirts and sold 1,740. Required: 1. Assuming Dance Creations uses variable costing, calculate the variable manufacturing cost per unit for last month. 2. Complete a contribution margin income statement for the last month. 3. Assuming Dance Creations uses full absorption costing, calculate the full manufacturing cost per unit for the last month. 4. Complete a full absorption costing income statement. 6. Suppose next month Dance Creations expects to produce 1,880 hula skirts and sell 1,980. Without recreating the new income statements, calculate the difference in profit between variable costing and full absorption costing. Which would be higher?
Dance Creations manufactures authentic Hawaiian hula skirts that are purchased for traditional Hawaiian celebrations, costume parties, and other functions. During its first year of business, the company incurred the following costs: Variable Cost per Hula Skirt Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed Costs per Month Fixed manufacturing overhead Fixed selling and administrative expenses $10.55 4.35 1.50 0.45 $ 19,550 5,900 Dance Creations charges $35 for each skirt that it sells. During the first month of operation, it made 1,880 skirts and sold 1,740. Required: 1. Assuming Dance Creations uses variable costing, calculate the variable manufacturing cost per unit for last month. 2. Complete a contribution margin income statement for the last month. 3. Assuming Dance Creations uses full absorption costing, calculate the full manufacturing cost per unit for the last month. 4. Complete a full absorption costing income statement. 6. Suppose next month Dance Creations expects to produce 1,880 hula skirts and sell 1,980. Without recreating the new income statements, calculate the difference in profit between variable costing and full absorption costing. Which would be higher?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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Question
Need 2,4, and 6 completed please
Transcribed Image Text:Dance Creations manufactures authentic Hawaiian hula skirts that are purchased for traditional Hawaiian celebrations,
costume parties, and other functions. During its first year of business, the company incurred the following costs:
Variable Cost per Hula Skirt
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative expenses
Fixed Costs per Month
Fixed manufacturing overhead
Fixed selling and administrative expenses
Dance Creations charges $35 for each skirt that it sells. During the first month of operation, it made 1,880 skirts and
sold 1,740.
Required:
1. Assuming Dance Creations uses variable costing, calculate the variable manufacturing cost per unit for last month,
2. Complete a contribution margin income statement for the last month.
3. Assuming Dance Creations uses full absorption costing, calculate the full manufacturing cost per unit for the last
month.
$10.55
4.35
1.50
0.45
4. Complete a full absorption costing income statement.
6. Suppose next month Dance Creations expects to produce 1,880 hula skirts and sell 1,980. Without recreating the
new income statements, calculate the difference in profit between variable costing and full absorption costing. Which
would be higher?
$ 19,550
5,900
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3 Required 4 Required 6
Dance Creations
Full Absorption Income Statement
For Last Month
Complete a full absorption costing income statement.
Note: Round your intermediate calculations to 2 decimal places. Round your final answer to nearest whole dollar.
Sales Revenue
Cost of Goods Sold
$
60,900
46,632
Transcribed Image Text:Requirea:
1. Assuming Dance Creations uses variable costing, calculate the variable manufacturing cost per unit for last month.
2. Complete a contribution margin income statement for the last month.
3. Assuming Dance Creations uses full absorption costing, calculate the full manufacturing cost per unit for the last
month.
4. Complete a full absorption costing income statement.
6. Suppose next month Dance Creations expects to produce 1,880 hula skirts and sell 1,980. Without recreating the
new income statements, calculate the difference in profit between variable costing and full absorption costing. Which
would be higher?
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3 Required 4 Required 6
Complete a contribution margin income statement for the last month.
Dance Creations
Contribution Margin Income Statement
For the Last Month
Sales Revenue
Contribution margin
Net Operating Income
< Required 1
Required 3 >
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