Grainger Company produces only one product and sells that product for $100 per unit. Cost information for the product is as follows: Direct Material $14 per Unit Direct Labor $24 per Unit Variable Overhead $5 per Unit Fixed Overhead $40,800 Selling expenses are $4 per unit and are all variable. Administrative expenses of $24,000 are all fixed. Grainger produced 6,000 units; sold 4,800; and had no beginning inventory. A. Compute net income under i. Absorption Costing $ ii. Variable Costing $ B. Which costing method provide higher net income? By how much? The method provided more net income by $

Grainger Company produces only one product and sells that product for $100 per unit. Cost information for the product is as follows: Direct Material $14 per Unit Direct Labor $24 per Unit Variable Overhead $5 per Unit Fixed Overhead $40,800 Selling expenses are $4 per unit and are all variable. Administrative expenses of $24,000 are all fixed. Grainger produced 6,000 units; sold 4,800; and had no beginning inventory. A. Compute net income under i. Absorption Costing $ ii. Variable Costing $ B. Which costing method provide higher net income? By how much? The method provided more net income by $

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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Cecil Incorporated provided the following information regarding its only product: Sale price per unit Direct materials used Direct labor incurred Variable manufacturing overhead Variable selling and administrative expenses Fixed manufacturing overhead Fixed selling and administrative expenses Units produced and sold Assume no beginning inventory $50.00 $161,000 $189,000 $124,000 $70,000 $65,000 $12,000 21,000 Assuming there is excess capacity, what would be the effect on operating income of accepting a special order for 5,100 units at a sale price of $45 per product? (NOTE: Assume regular sales are not affected by the special order. Round any intermediary calculations to the nearest cent.) O A. Decrease by $97,410 OB. Increase by $361.590 *****
Grainger Company produces only one product and sells that product for $110 per unit. Cost information for the product is as follows: Direct Material $16 per Unit Direct Labor $26 per Unit Variable Overhead $6 per Unit Fixed Overhead $27,200 Selling expenses are $5 per unit and are all variable. Administrative expenses of $20,000 are all fixed. Grainger produced 4,000 units; sold 3,200; and had no beginning inventory. A. Compute net income under i. Absorption Costing $fill in the blank 1 ii. Variable Costing $fill in the blank 2 B. Which costing method provide higher net income? By how much? The method provided more net income by $fill in the blank 4 .
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ed Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($60 per unit) Year 1 $ Year 2 $ 1,920,000 3,960,000 Cost of goods sold ($45 per unit) 1,440,000 2,970,000 Gross profit 480,000 990,000 Selling and administrative expenses ok Income t 338,000 474,000 $ 142,000 $ 516,000 Additional Information a. Sales and production data for these first two years follow. Year 1 Year 2 nces Units Units produced 49,000 49,000 Units sold 32,000 66,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $45 per unit product cost using absorption costing consists of the following. Direct materials Direct labor $ 12 19 Variable overhead Fixed overhead ($539,000/49,000 units) 3 11 Total product cost per unit $ 45 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and…