Problem 8-33 Absorption and Variable Costing; CVP Analysis (LO 8-2, 8-3, 8-4, 8-5)Yellowstone Company began operations on January 1 to produce a single product. It used an absorption costing system with aplanned production volume of 85,000 units. During its first year of operations, the planned production volume was achieved, andthere were no fixed selling or administrative expenses. Inventory on December 31 was 8,500 units, and operating income for the yearwas $382,500.Required:1. If Yellowstone Company had used variable costing, its operating income would have been $340,000. Compute the break-even pointin units under variable costing.Answer is complete but not entirely correct.Break-even point212,500 unitsNOV6< Prevtv ♫6 of 6 #MacBook ProNext >alıÅRet

Answer : Fixed manufacturing cost in ending inventory = $340,000 - $382,500 = 42,500 Fixed…

Answered: erations on January 5,000 units. During…

Business

Accounting

erations on January 5,000 units. During it ministrative expense

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 66P: Variable-Costing and Absorption-Costing Income Borques Company produces and sells wooden pallets...

See similar textbooks

Similar questions

Estimated income statements, using absorption and variable costing Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: The company is evaluating a proposal to manufacture 50,000 units instead of 40,000 units, thus creating an ending inventory of 10,000 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 units are manufactured in (1) the absorption costing format and (2) the variable costing format. b. What is the reason for the difference in operating income reported for the two levels of production by the absorption costing income statement?
Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month with the following unit costs: Fixed overhead per unit = 280,000/40,000 units produced = 7. Total fixed factory overhead is 280,000 per month. During October, 38,400 units were sold at a price of 24, and fixed marketing and administrative expenses were 130,500. Required: 1. Calculate the cost of each unit using absorption costing. 2. How many units remain in ending inventory? What is the cost of ending inventory using absorption costing? 3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October. 4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of ending inventory? What is operating income for November?
Appendix Absorption costing income statement On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable existing concept: Sales (420,000 units) 7,450,000 Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x 14 per unit) 7,000,000 Less ending inventory (80,000 units x 14 per unit) 1,120,000 Variable cost of goods sold 5,880,000 Manufacturing margin 1,570,000 Variable selling and administrative expenses 80,000 Contribution margin 1,490,000 Fixed costs: Fixed manufacturing costs 160,000 Fixed selling and administrative expenses 75,000 235,000 Income from operations 1,255,000 a. Prepare an absorption costing income statement. b. Reconcile the variable costing income from operations of 1,255,000 with the absorption costing income from operations determined in (a).
Variable-Costing and Absorption-Costing Income Borques Company produces and sells wooden pallets that are used for moving and stacking materials. The operating costs for the past year were as follows: During the year, Borques produced 200,000 wooden pallets and sold 204,300 at 9 each. Borques had 8,200 pallets in beginning finished goods inventory; costs have not changed from last year to this year. An actual costing system is used for product costing. Required: 1. What is the per-unit inventory cost that is acceptable for reporting on Borquess balance sheet at the end of the year ? How many units are in ending inventory? What is the total cost of ending inventory? 2. Calculate absorption-costing operating income. 3. CONCEPTUAL CONNECTION What would the per-unit inventory cost be under variable costing? Does this differ from the unit cost computed in Requirement 1? Why? 4. Calculate variable-costing operating income. 5. Suppose that Borques Company had sold 196,700 pallets during the year. What would absorption-costing operating income have been? Variable-costing operating income?
Jellison Company had the following operating data for its first two years of operations: Jellison produced 90,000 units in the first year and sold 80,000. In the second year, it produced 80,000 units and sold 90,000 units. The selling price per unit each year was 12. Jellison uses an actual costing system for product costing. Required: 1. Prepare income statements for both years using absorption costing. Has firm performance, as measured by income, improved or declined from Year 1 to Year 2? 2. Prepare income statements for both years using variable costing. Has firm performance, as measured by income, improved or declined from Year 1 to Year 2? 3. Which method do you think most accurately measures firm performance? Why?
Refer to Cornerstone Exercise 18.3. Required: 1. Calculate the cost of each unit using variable costing. 2. How many units remain in ending inventory? What is the cost of ending inventory using variable costing? 3. Prepare a variable-costing income statement for Pattison Products, Inc., for the month of October. 4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of ending inventory? What is operating income for November?
Question No. 4: Absorption and Marginal Costing The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Beginning inventory 0 Units produced 9,000 Units sold 7,000 Selling price per unit $ 47 Selling and administrative expenses: Variable per unit $ 4 Fixed per year $ 58,000 Manufacturing costs: Direct materials cost per unit $ 10 Direct labor cost per unit $ 6 Variable manufacturing overhead cost per unit $ 5 Fixed manufacturing overhead per year $ 90,000 Assume that direct labor is a variable cost. Required: Prepare an income statement for the year using absorption costing Prepare an income statement for the year using variable costing Reconcile the absorption costing and variable costing net operating income figures
Question No.3: Absorption and Marginal Costing The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Beginning inventory 0 Units produced 9,000 Units sold 7,000 Selling price per unit $ 47 Selling and administrative expenses: Variable per unit $ 4 Fixed per year $ 58,000 Manufacturing costs: Direct materials cost per unit $ 10 Direct labor cost per unit $ 6 Variable manufacturing overhead cost per unit $ 5 Fixed manufacturing overhead per year $ 90,000 Assume that direct labor is a variable cost. Required: a) Prepare an income statement for the year using absorption costing b) Prepare an income statement for the year using variable costing c) Reconcile the absorption costing and variable costing net operating income figures
Problems 1. During the most recent year, Pilkey Ltd had the following date associated with the product it makes: Units in beginning inventory Units produced 10,000 units 8,000 units Units sold ($300 per unit) Variable costs per unit: Direct materials $50 Direct labour $100 Variable overhead $50 Fixed costs: $25 Fixed manufacturing overhead per unit produced Fixed selling and administrative $100,000 Required: 1. Calculate the unit product cost using both absorption and variable costing. 2. Prepare an income statement using absorption costing. 3. Prepare an income statement using variable costing.
Subject: Cost management & accounting Question No. 3: Absorption and Marginal CostingThe Dorset Corporation produces and sells a single product. The following data refer to the year just completed:Beginning inventory 0Units produced 10,000Units sold 8,000Selling price per unit $50Selling and administrative expenses:Variable per unit $5Fixed per year $60,000Manufacturing costs:Direct materials cost per unit $10Direct labor cost per unit $6Variable manufacturing overhead cost per unit $5Fixed manufacturing overhead per year $80,000Assume that direct labor is a variable cost.Required:a. Prepare an income statement for the year using absorption costing and variable costingb. Reconcile the absorption costing and variable costing net operating income figures
1 Absorption Costing Income Statement On October 31, the end of the first month of operations, Maryville Equipment Company prepared the following income statement, based on the variable costing concept: Sales (14,000 units) Variable cost of goods sold: Variable cost of goods manufactured Inventory, October 31 (1,800 units) Total variable cost of goods sold Maryville Equipment Company Variable Costing Income Statement For the Month Ended October 31 Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Operating income Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Operating income Line Item Sales Absorption Costing Income Statement For the Month Ended October 31 Description ✔ Cost of goods sold: Cost of goods manufactured Inventory, October 31 Total cost of goods sold Prepare an income statement under…
Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (40,000 x $90) $3,600,000 Manufacturing costs (40,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Fixed selling and administrative expenses Variable selling and administrative expenses The company is evaluating a proposal to manufacture 50,000 units instead of 40,000 units, thus creating an ending inventory of 10,000 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. Sales Cost of goods sold: Cost of goods manufactured…