[The following information applies to the questions displayed below.]Diego Company manufactures one product that is sold for $78 per unit. The following information pertains to thecompany's first year of operations in which it produced 60,000 units and sold 55,000 units.Variable costs per unit:Manufacturing:Direct materialsDirect labourVariable manufacturing overheadVariable selling and administrativeFixed costs per year:Fixed manufacturing overheadFixed selling and administrative expenses$Net operating incomeNet operating lossLALALALA$$$6. What is the company's net operating income (loss) under absorption costing?822312$1,260,000$ 654,000 Required information[The following information applies to the questions displayed below.]Diego Company manufactures one product that is sold for $78 per unit. The following information pertains to thecompany's first year of operations in which it produced 60,000 units and sold 55,000 units.Variable costs per unit:Manufacturing:Direct materialsDirect labourVariable manufacturing overheadVariable selling and administrativeFixed costs per year:Fixed manufacturing overheadFixed selling and administrative expenses$$$$Variable costing net operating income (loss)288223Absorption costing net operating income (loss)127. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)$1,260,000$ 654,000Difference of Variable Costing and Absorption Costing Net Operating Incomes

Unit product cost under Variable costing includes the product cost that is direct materials, direct…

Diego Company manufactures one product that is sold for $78 per unit. The following information pertains to the company's first year of operations in which it produced 60,000 units and sold 55,000 units. Variable costs per unit: Manufacturing: Direct materials. Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ $ $ Net operating income Net operating loss 5. What is the company's net operating income (loss) under absorption costing? 28 8223 12 $1,260,000 $ 654,000

Diego Company manufactures one product that is sold for $78 per unit. The following information pertains to the company's first year of operations in which it produced 60,000 units and sold 55,000 units. Variable costs per unit: Manufacturing: Direct materials. Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ $ $ Net operating income Net operating loss 5. What is the company's net operating income (loss) under absorption costing? 28 8223 12 $1,260,000 $ 654,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A condensed income statement by product line for British Beverage Inc. indicated the following for King Cola for the past year: Sales $235,100 Cost of goods sold 112,000 Gross profit $123,100 Operating expenses 145,000 Loss from operations $(21,900) It is estimated that 16% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Since King Cola is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether to Continue King Cola (Alternative 1) or Discontinue King Cola (Alternative 2). If an amount is zero, enter zero "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential AnalysisContinue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2)March 3 Continue KingCola (Alternative 1) Discontinue KingCola (Alternative 2) Differential…
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$62 per unit) Cost of goods sold (@ $40 per unit) Gross margin Selling and administrative expenses* Net operating income * $3 per unit variable; $249,000 fixed each year. The company's $40 unit product cost is computed as follows: Units produced Units sold Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($330,000 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 Year 2 $ 1,054,000 $ 1,674,000 1,080,000 594,000 330,000 $ 264,000 Year 1 22,000 17,000 Required 1 680,000 374,000 300,000 $ 74,000 Required 2 Required 3 Year 2 22,000 27,000 Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable…
Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: $ 27 $ 11 $ 6 $ 5 Fixed manufacturing overhead Fixed selling and administrative expenses $ 320,000 $ 60,000 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $55 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 3. Reconcile the difference between…
Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative. Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 30 $ 14 $ 3 $ 2 $ 320,000 $ 80,000 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $57 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 3. Reconcile the difference…
2. A condensed income statement by product line for Master Energy Co. indicated the following for the Master Energy product line for the past year: Revenues and Costs Dollar Amount Sales $12,500,000 Cost of goods sold Gross profit Operating expenses Loss from operations 8,250,000 4,250,000 6,010,000 (1,760,000) It is estimated that 25% of the cost of goods sold represents fixed factory overhead costs and that 15% of the operating expenses are fixed. Because Master Energy is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis dated January 31st to determine whether Master Energy should be continued (Alternative 1) or discontinued (Alternative 2). b. Should Master Energy be retained? Explain.
Ogilvy Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable cost per unit: Direct materials $ 18 Fixed costs per year: Direct labor $ 682,000 Fixed manufacturing overhead $ 824,000 Fixed selling and administrative expenses $ 220,000 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Ogilvy produced 62,000 units and sold 62,000 units. During its second year of operations, it produced 62,000 units and sold 59,800 units. In its third year, Ogilvy produced 62,000 units and sold 64,200 units. The selling price of the company’s product is $46 per unit. Assume the company uses super-variable costing: Compute the unit product cost for Year 1, Year 2, and Year 3. Prepare an income statement for Year 1, Year 2, and Year 3.
Assume the following information for the first year of operations for a company that sells only one product for a price of $48 per unit: 19 Variable cost per unit: Direct materials 25 Fixed costs per year: points Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses $140,000 $200,000 $ 70,000 00:31:10 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first y operations, the company produced 20,000 units and sold 18,000 units. The company wishes to compare a variable costing system that assigns $7.00 of direct labor cost to each unit produced with a super-varia system. Which of the following statements is true when comparing these two cost systems? Multiple Choice The variable costing net operating income will be $14,000 greater than the super-variable costing net operating Income. The variable costing net operating income will be $126,000 greater than the super-variable costing…
Rey Company’s only product sells for $226 per unit. Data for its first year of operations follow. Direct materials $ 30 per unit Direct labor $ 38 per unit Variable overhead $ 14 per unit Fixed overhead $ 456,000 per year Variable selling and administrative expenses $ 28 per unit Fixed selling and administrative expenses $ 220,000 per year Units produced and sold 28,500 units 1. Prepare an income statement for the year using absorption costing2. Prepare an income statement for the year using variable costing.