. Eagle’s Eye View manufactures satellite dishes used in residential and commercial installations for satellite- broadcast television. For each unit, the following costs apply: Rs.50 for direct material, Rs. 100 for direct labor, and Rs.60 for variable overhead. The company’s annual fixed overhead cost is Rs. 750,000; it uses expected capacity of 12,500 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are Rs. 180,000. The following additional information is available:2018 2019Selling price per unit Rs.400 Rs. 400Number of units sold 10,000 12,000Number of units produced 12,500 11,000Beginning inventory (units) 7,500 10,000Ending inventory (units) 10,000 ?Required: a. Prepare pre-tax income statement under absorption and variable costing for the years ended 2018 and 2019, with any volume variance being charged to Cost of Goods Sold.b. Reconcile the differences in income for the two methods.c. Which of the income statements would represent fair view of the performance of the organization for external reporting purposes under the prevailing accounting principles and practices. Q. 1.a. Eagle's Eye View manufactures satellite dishes used in residential and commercial installationsfor satellite- broadcast television. For each unit, the following costs apply: Rs.50 for direct material, Rs.100 for direct labor, and Rs.60 for variable overhead. The company's annual fixed overhead cost is Rs.750,000; it uses expected capacity of 12,500 units produced as the basis for applying fixed overhead toproducts. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed sellingand administrative expenses are Rs. 180,000. The following additional information is available:20182019Selling price per unitNumber of units soldRs.400Rs. 40010,00012,5007,50012,000Number of units produced11,00010,000Beginning inventory (units)Ending inventory (units)10,000Required:a. Prepare pre-tax income statement under absorption and variable costing for the years ended2018 and 2019, with any volume variance being charged to Cost of Goods Sold.b. Reconcile the differences in income for the two methods.Which of the income statements would represent fair view of the performance of theorganization for external reporting purposes under the prevailing accounting principles andpractices.C.

Variable costing involve all type of variable cost for determining net income and absorption costing…

Eagle’s Eye View manufactures satellite dishes used in residential and commercial installations for satellite- broadcast television. For each unit, the following costs apply: Rs.50 for direct material, Rs. 100 for direct labor, and Rs.60 for variable overhead. The company’s annual fixed overhead cost is Rs. 750,000; it uses expected capacity of 12,500 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are Rs. 180,000. The following additional information is available: 2018 2019 Selling price per unit Rs.400 Rs. 400 Number of units sold 10,000 12,000 Number of units produced 12,500 11,000 Beginning inventory (units) 7,500 10,000 Ending inventory (units) 10,000 ? Required: a. Prepare pre-tax income statement under absorption and variable costing for the years ended 2018 and 2019, with any volume variance being charged to Cost of Goods Sold. b. Reconcile the differences in income for the two methods. c. Which of the income statements would represent fair view of the performance of the organization for external reporting purposes under the prevailing accounting principles and practices.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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. Eagle’s Eye View manufactures satellite dishes used in residential and commercial installations
for satellite- broadcast television. For each unit, the following costs apply: Rs.50 for direct material, Rs.
100 for direct labor, and Rs.60 for variable overhead. The company’s annual fixed overhead cost is Rs.
750,000; it uses expected capacity of 12,500 units produced as the basis for applying fixed overhead to
products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling
and administrative expenses are Rs. 180,000. The following additional information is available:
2018 2019
Selling price per unit Rs.400 Rs. 400
Number of units sold 10,000 12,000
Number of units produced 12,500 11,000
Beginning inventory (units) 7,500 10,000
Ending inventory (units) 10,000 ?
Required:
a. Prepare pre-tax income statement under absorption and variable costing for the years ended
2018 and 2019, with any volume variance being charged to Cost of Goods Sold.
b. Reconcile the differences in income for the two methods.
c. Which of the income statements would represent fair view of the performance of the
organization for external reporting purposes under the prevailing accounting principles and
practices.

Q. 1.a. Eagle's Eye View manufactures satellite dishes used in residential and commercial installations
for satellite- broadcast television. For each unit, the following costs apply: Rs.50 for direct material, Rs.
100 for direct labor, and Rs.60 for variable overhead. The company's annual fixed overhead cost is Rs.
750,000; it uses expected capacity of 12,500 units produced as the basis for applying fixed overhead to
products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling
and administrative expenses are Rs. 180,000. The following additional information is available:
2018
2019
Selling price per unit
Number of units sold
Rs.400
Rs. 400
10,000
12,500
7,500
12,000
Number of units produced
11,000
10,000
Beginning inventory (units)
Ending inventory (units)
10,000
Required:
a. Prepare pre-tax income statement under absorption and variable costing for the years ended
2018 and 2019, with any volume variance being charged to Cost of Goods Sold.
b. Reconcile the differences in income for the two methods.
Which of the income statements would represent fair view of the performance of the
organization for external reporting purposes under the prevailing accounting principles and
practices.
C.

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