Exercise 19-15 (Algo) Absorption costing and overproduction LO C1A manufacturer reports direct materials of $6 per unit, direct labor of $3 per unit, and variable overhead of $5 per unit. Fixed overheadis $136,000 per year, and the company estimates sales of 13,600 units at a sales price of $25 per unit for the year. The company hasno beginning finished goods inventory.1. If the company uses absorption costing, compute gross profit assuming (a) 13,600 units are produced and 13,600 units are sold and(b) 17,000 units are produced and 13,600 units are sold.2. If the company uses variable costing, how much would contribution margin differ if the company produced 17,000 units instead ofproducing 13,600? Assume the company sells 13,600 units. Hint: Calculations are not required.Complete this question by entering your answers in the tabs below.Required 1 Required 2If the company uses absorption costing, compute gross profit assuming (a) 13,600 units are produced and 13,600 units aresold and (b) 17,000 units are produced and 13,600 units are sold.SalesCost of goods soldGross profit(a) 13,600 Units (b) 17,000 UnitsProduced and13,600 Units SoldProduced and13,600 Units SoldRequired 1Required 2 >

ABSORPTION COSTINGAbsorption Costing is a Cost Management Accounting method in which all costs…

Answered: Exercise 19-15 (Algo) Absorption…

FINANCIAL ACCOUNTING

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Author:Libby

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Chapter1: Financial Statements And Business Decisions

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1 of 12 Assignment: 1 Case: 1 The Cost Sheet of a product is given as under: Direct Materials Direct Wages Factory Overheads: Fixed Variable Administrative Expenses: Selling and Distribution Overheads: Fixed Variable Total OMR 6.00 3.00 0.50 0.50 0.75 0.25 0.50 11.50 The selling price per unit is OMR 13. The above figures are for an output of 85,000 units, the capacity of the firm is 100,000 units. A foreign customer is desirous of buying 15,000 units at a price of OMR 10.50 per unit. (A) Advise the manufacturer, whether the order should be accepted. (B) What will be your advice, if the orders were from a local merchant, at the same price? (C) What would be the profits, if the local selling price falls to OMR 11 from OMR 13, after acceptance of the order from a local merchant?
Question 20 Bell Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $33.00 Variable costs per unit. Direct material $6.00 Direct manufacturing labor $1.50 $0.25 Manufacturing overhead Selling costs $2.00 Annual fixed costs $111,000 The company sells 12,000 units. The contribution margin per unit is $23.25 $25.50 $14.00 $25.25
Exercise 19-7 (Algo) Income reporting under absorption costing and variable costing LO P2 Sims Company began operations on January 1. Its cost and sales information for this year follow. Direct materials $ 40 per unit Direct labor $ 60 per unit Variable overhead $ 40 per unit Fixed overhead $ 6,300,000 per year Variable selling and administrative expenses $ 11 per unit Fixed selling and administrative expenses $ 5,000,000 per year Units produced 105,000 units Units sold 75,000 units Sales price $ 350 per unit 1. Prepare an income statement for the year using variable costing.2. Prepare an income statement for the year using absorption costing.
Question Content Area Moon Company uses the variable cost method of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 75,000 units of Product T are as follows: Variable costs per unit: Direct materials $ 7.00 Direct labor 3.50 Factory overhead 1.50 Selling and administrative expenses 3.00 Total $15.00 Fixed costs: Line Item Description Amount Factory overhead $45,000 Selling and administrative expenses 20,000 Moon desires a profit equal to an 18% return on invested assets of $1,440,000. c. Determine the markup percentage for Product T. Round your answer to one decimal place.fill in the blank 1 of 1%
How do I answer this question? Pt 3 Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 7.00 Direct labor $ 4.00 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 5.00 Fixed selling expense $ 3.50 Fixed administrative expense $ 2.50 Sales commissions $ 1.00 Variable administrative expense $ 0.50 Required: 7. If 18,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production? 8. If 22,000 units are produced, what is the total amount of fixed manufacturing overhead incurred to support this level of production?
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 10 Direct labor $7 $3 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: $3 Fixed manufacturing overhead $ 380,000 Pixed selling and administrative $ 290,000 During the year, the company produced 38,000 units and sold 18,000 units. The selling price of the company's product is $61 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. A b. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Req 1A Reg 28 Reg 2A Req 18 Compute the unit product cost. Assume that the company uses absorption costing. During the year, the…
! Required information Exercise 19-3 (Algo) Income statement under absorption costing and variable costing LO P1, P2 [The following information applies to the questions displayed below.] Cool Sky reports the following for its first year of operations. The company produced 42,000 units and sold 34,000 units at a price of $150 per unit. Direct materials Direct labor Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses Exercise 19-3 (Algo) Part 2b Income 2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing. $ 66 per unit $ 25 per unit $9 per unit $546,000 per year. $ 12 per unit $ 100,000 per year Income Statement (Variable Costing)
Problem 19-4AA (Algo) Converting variable costing income to absorption costing income LO A2 Dowell Company produces a single product. Its income under variable costing for its first two years of operation follow. Variable Costing Income Income Additional Information a. Sales and production data for these first two years follow. Unite Units produced Units sold Direct materials Direct labor Year 1. Year 2 $ 47,000 $ 650,000 Year 1 48,700 37,000 b. The company's $37 per unit product cost (for both years) using absorption costing consists of the following. Year 2 48,700 60,400 Variable overhead Fixed overhead ($470,000/47,000 units) Total product cost per unit Variable costing income Absorption costing income $7 11 9 Required: Prepare a statement to convert variable costing income to absorption costing income for both years. (Leave no cells blank - be certain to enter "0" wherever required.) 10 $ 37 Dowell Company Convert Variable Costing Income to Absorption Costing Income Year 1 $ 47,000…
QUESTION 2: ABSORPTION AND VARIABLE COSTING AND BUDGETING ( Good Toys Company produces a toy product. Data concerning the company’s operations last year appear below: Units in beginning inventory 0 Units produced 15,000 Units sold 12,000 Selling price per unit $110 Variable cost per unit: Direct materials $30 Direct labour $20 Variable manufacturing overhead $10 Variable selling and administrative costs $8 Fixed costs in total: Fixed manufacturing overhead $225,000 Fixed selling and administrative costs $280,000 Required (show your calculations):Prepare a variable costing income statement for the year. Type in answers to Question 2. a. (expand the space as needed) Client Solutions is working on its direct labour…
Chapter 6: A Closer Look on Cost Accounting The company makes 2,350 units of product X a year, requiring a total os 3.300 machine hours, 250 orders and 200 inspection hours per year. The product's direct material cost is P201.50 and its direct labor cost in P211.11 per unit. The product sells for P590 per unit. According to the activity-based costing system, the gross margin for product X is? 423,087.50 b. 350,435.50 c. 416,890 d. None of the choice a. 56. The following information is available for Mary Corp. Activity Pool Setups Quality Inspections Assembly (direct labor hour) What is the activity rate for setups? Activity Base 50,000 120,000 400,000 Budgeted Amount 300,000 600,000 2,000,000 a. P5.09 c. РО.75 d. P58.00 b. Рб.00 The activity rate for quality inspection is: с. Рб.00 d. P5.09 a. P5.29 b. P5.00
Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc.Absorption Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Cost of goods sold: Cost of goods manufactured $840,000 Ending inventory (168,000) Total cost of goods sold (672,000) Gross profit $528,000 Selling and administrative expenses (289,000) Operating income $239,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable manufacturing costs. This type of income statement includes a computation of manufacturing margin. Saxon, Inc.Variable Costing Income StatementFor the Year Ended December 31 Sales $1,200,000 Variable cost of goods sold: Variable cost of goods manufactured $600,000 Ending inventory (120,000) Total variable cost of goods sold (480,000) Manufacturing…
Exercise 3 (Variable Costing Unit Product Cost and Income Statement; Break-even) PC Desk, Inc., makes an oak desk specially designed for personal computers. The desk sells for P2,000. Data for last year's operations follow: Units in beginning inventor.. Units produced.. Units sold. Units in ending inventory. 10,000 9,000 1,000 Variable costs per unit: Direct materials.. Direct labor Variable manufacturing overhead. Variable selling and administrative Total variable cost per unit. . P 600 300 100 200 P1,200 Fixed costs: Fixed manufacturing overhead Fixed selling and administrative. Total fixed costs... P3,000,000 4,500,000 P7,500,000 Required: 1. Assume that the company uses variable costing. Compute the unit product cost for one computer desk. 2. Assume that the company uses variable costing. Prepare an income statement for the year using the contribution format. 3. What is the company's break-even point in terms of units sold?

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