Please provide the answer to this general accounting question with proper steps. Empire Manufacturing had 2,500 units of ending inventory at the end of itsfirst year. The variable manufacturing cost per unit was $45, and fixedmanufacturing cost per unit was $15. If Empire uses absorption costinginstead of variable costing, by how much would its pretax income beaffected?

Step 1: Definition of Absorption vs. Variable Costing Impact on Pretax IncomeAbsorption costing…

Answered: Empire Manufacturing had 2,500 units of…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter10: Inventory

Section: Chapter Questions

Problem 1PB: When prices are falling (deflation), which costing method would produce the highest gross margin for...

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The following information pertains to Vladamir, Inc., for last year: There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next. Required: 1. How many units are in ending inventory? 2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income. 3. Assume the selling price per unit is 29. Prepare an income statement using (a) variable costing and (b) absorption costing.
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The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31: Assume that 8,500 million of cost of goods sold and 4,000 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Also, assume that 30% of the beginning and ending inventories were fixed costs. a. Prepare an income statement according to the variable costing concept for Caterpillar Inc. Round numbers to nearest million. b. Explain the difference between the amount of operating income reported under the absorption costing and variable costing concepts. Round numbers to nearest million.
Pietro expects to produce 50,000 units and sell 49,300 units. Beginning inventory of finished goods is 42,500, and ending inventory of finished goods is expected to be 34,000. Required: 1. Prepare a statement of cost of goods sold in good form. 2. What if the beginning inventory of finished goods decreased by 5,000? What would be the effect on the cost of goods sold?
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What is the absorption costing net operating income for last year on these general accounting question?
The net profit of a company for a year on a variable costing basis is $92,000. On an absorption costing basis, the net profit is $78,800. Fixed manufacturing overhead unit were the same in both the prior costs per and current year (i.e. $1.10 per unit). What was the change in inventory over the year?
Review the income statements on the Absorption Statement and Variable Statement panels, then complete the following table. The company’s sales price per unit is $75.00, and the number of units in ending inventory is 5,000. Item Amount Number of units sold Variable sales and administrative cost per unit Number of units manufactured Variable cost of goods manufactured per unit Fixed manufacturing cost per unit Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 1 Sales $1,125,000.00 2 Cost of goods sold: 3 Beginning inventory $0.00 4 Cost of goods manufactured 840,000.00 5 Ending inventory (210,000.00) 6 Total cost of goods sold 630,000.00 7 Gross profit $495,000.00 8 Selling and administrative expenses 275,000.00 9 Income from operations $220,000.00 Saxon, Inc. Variable…
During 2020, Rafael Corp. produced 48,700 units and sold 34,090 for $14 per unit. Variable manufacturing costs were $7 per unit. Annual fixed manufacturing overhead was $102,270 ($3 per unit). Variable selling and administrative costs were $2 per unit sold, and fixed selling and administrative expenses were $19,200. Prepare an absorption-costing income statement. Rafael Corp. Income Statement-Absorption Costing Reconcile the difference between the net income under variable costing and the net income under absorption costing. That is, show a calculation that explains what causes the difference in net income between the two approaches. Variable costing net income Fixed manufacturing overhead costs deferred in ending inventory Absorption costing operating income $ $
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Empire Manufacturing had 2,500 units of ending inventory at the end of its first year. The variable manufacturing cost per unit was $45, and fixed manufacturing cost per unit was $15. If Empire uses absorption costing instead of variable costing, by how much would its pretax income be affected?