Gardener Company produces plastic that is used for injection- modeling applications such as gears for small motors. In 2013, the first year of operations, Gardener produced 4,000 tons of plastic and sold 2,500 tons. In 2014, the company produced the same amount of plastic and sales were 5,000 tons (i.e. the company sold all of its inventory). In each year, the selling price per ton was $2,000, variable manufacturing costs per ton of plastic were $400, variable selling expenses were $600 for each ton of plastic sold. Fixed manufacturing costs were $4,000,000 and fixed administrative expenses were $500,000. What is the net income under variable costing in year 2013?

Gardener Company produces plastic that is used for injection- modeling applications such as gears for small motors. In 2013, the first year of operations, Gardener produced 4,000 tons of plastic and sold 2,500 tons. In 2014, the company produced the same amount of plastic and sales were 5,000 tons (i.e. the company sold all of its inventory). In each year, the selling price per ton was $2,000, variable manufacturing costs per ton of plastic were $400, variable selling expenses were $600 for each ton of plastic sold. Fixed manufacturing costs were $4,000,000 and fixed administrative expenses were $500,000. What is the net income under variable costing in year 2013?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

See similar textbooks

Similar questions

Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 6,000 tons of plastic and sold 4,500 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,000, variable manufacturing costs were 19% of the sales price of units produced, variable selling expenses were 8% of the selling price of units sold, fixed manufacturing costs were $4,380,000, and fixed administrative expenses were $540,000. Prepare income statements for each year using variable costing. JACKSON COMPANYIncome Statement Variable Costing $…
Gardener company produces plastic that is used provide answer accounting questions
LLAP Company manufactures a specialized hoverboard. LLAP began 2017 with an inventory of 240 hoverboards. During the year, it produced 1,200 boards and sold 1,300 for $800 each. Fixed production costs were $319,000, and variable production costs were $375 per unit. Fixed advertising, marketing, and other general and administrative expenses were $150,000, and variable shipping costs were $20 per board. Assume that the cost of each unit in beginning inventory is equal to 2017 inventory cost. Q. The company that supplies LLAP with its specialized impact-resistant material has announced a price increase of $20 for each board. What effect would this have on the breakeven points previously calculated in requirement 3?
LLAP Company manufactures a specialized hoverboard. LLAP began 2017 with an inventory of 240 hoverboards. During the year, it produced 1,200 boards and sold 1,300 for $800 each. Fixed production costs were $319,000, and variable production costs were $375 per unit. Fixed advertising, marketing, and other general and administrative expenses were $150,000, and variable shipping costs were $20 per board. Assume that the cost of each unit in beginning inventory is equal to 2017 inventory cost. Q. Compute the breakeven point in units sold assuming LLAP uses the following: a. Variable costing b. Absorption costing (Production = 1,200 boards)
LLAP Company manufactures a specialized hoverboard. LLAP began 2017 with an inventory of 240 hoverboards. During the year, it produced 1,200 boards and sold 1,300 for $800 each. Fixed production costs were $319,000, and variable production costs were $375 per unit. Fixed advertising, marketing, and other general and administrative expenses were $150,000, and variable shipping costs were $20 per board. Assume that the cost of each unit in beginning inventory is equal to 2017 inventory cost. Q. Assume that $44,000 of fixed administrative costs were reclassified as fixed production costs. Would this reclassification affect the breakeven point using variable costing? What if absorption costing were used? Explain
Olson manufactures a single product and sells it for $10 per unit. At the beginning of the year there were 1,000 units in inventory. Upon further investigation, you discover that units produced last year had $3.00 of fixed manufacturing cost and $2.00 of variable manufacturing cost. During the year Olson produced 10,000 units of product. Each unit produced generated $3.00 of variable manufacturing cost. Total fixed manufacturing cost for the current year was $40,000. There were no inventories at the end of the year. This current year Absorption Costing Net Income is Select one: a. $36,000 b. $35,000 c. $37,000 d. $38,000
Cell Peak produces shelving units. The variable cost of each shelving unit comprises of direct materials of $21, direct labor of $10, packaging costs of $7 and variable overheads of $2. Cell Peak has fixed overheads of $259124 and sells its shelving units for $75 each. Current sales are 25,000 shelving units per annum. What profit would CellPeak make if the company sold 18,000 shelving units?
Shalom Company manufactures and sells Peace products. During the year, the company estimated for the production and sale of 15,000 units of Peace products. Each unit requires 1.50 kilos of direct material at a cost of P8 per pound. It takes 15 minutes to manufacture each unit of Peace product at a cost of PO.18 per minute. At the end of the current year, Shalom had produced and sold 16,000 Peace products for P50 per unit. The actual costs for direct materials and direct labor were P179,200, and P44,800, respectively. In your flexible budget performance report, identify the difference between budgeted and actual costs and indicate as favorable or unfavorable. Format should be: 8,000 F or 8,000 UF No need to indicate if the amount is positive or negative.
Shalom Company manufactures and sells Peace products. During the year, the company estimated for the production and sale of 15,000 units of Peace products. Each unit requires 1.50 kilos of direct material at a cost of P8 per pound. It takes 15 minutes to manufacture each unit of Peace product at a cost of P0.18 per minute. At the end of the current year, Shalom had produced and sold 16,000 Peace products for P50 per unit. The actual costs for direct materials and direct labor were P179,200, and P44,800, respectively. In your flexible budget performance report, identify the difference between budgeted and actual costs and indicate as favorable or unfavorable. Format should be: 8,000 F or 8,000 UF No need to indicate if the amount is positive or negative. direct materials
Northwood Company manufactures basketballs. The company has a ball that sells for $25. At present, the ball Is manufactured In a small plant that relles heavly on direct labor workers. Thus, varlable expenses are high, totallng $15.00 per ball, of which 60% Is direct labor cost. Last year, the company sold 58,000 of these balls, with the following results: $ 1,450,000 Sales (58,800 balls) variable expenses Contribution margin Fixed expenses 870,000 580,000 374,000 Net operating income 206,000 Required: 1. Compute (a) last year's CM ratio and the break-even polnt in balls, and (b) the degree of operating leverage at last year's sales level. 2. Due to an Increase in labor rates, the company estimates that next year's varlable expenses will Increase by $3.00 per ball. If this change takes place and the selling price per ball remalns constant at $25.00, what will be next year's CM ratio and the break-even polnt in balls? 3. Refer to the data in (2) above. If the expected change in varlable…
Blossom Motors is a division of Blossom Products Corporation. The division manufactures and sells an electric switch used in a wide variety of applications. During the coming year, it expects to sell 180,000 units for $8.00 per unit. Donna Clark is the division manager. She is considering producing either 180,000 or 280,000 units during the period. Other information is as follows: Beginning inventory Expected sales in units Selling price per unit Variable manufacturing cost per unit Fixed manufacturing cost (total) Fixed manufacturing overhead costs per unit Based on 180,000 units Based on 280,000 units Manufacturing cost per unit Based on 180,000 units (a) Based on 280,000 units Variable selling and administrative expenses Fixed selling and administrative expenses (total) - Your answer is partially correct. Units produced Units sold (b) Sales Less Prepare an absorption-costing income statement, with one column showing the results if 180,000 units are produced and one column showing…
Jaroni Inc. produces specialty quilts and blankets using a partly manual, partly automated manufacturing process. Total sales for the previous period were $60,000. Wages, materials, and variable manufacturing overhead totaled $10,200. Salaries, depreciation, rent, and other fixed expenses amounted to $14,940. Jaroni charges $500 per customized blanket.What is Jaroni's break-even point in Sales Dollars?