Hawthorne Golf, the maker of a sought-after set of golf clubs, was formed in 2012. The selling price for each golf club set is $1,700, variable production costs are $900 per unit, fixed production costs are $2,027,100 per year, and fixed selling and administrative costs are $2,305,200 per year. Data below indicate net income for 2012?2014 under full costing. In 2012 and 2013, Milo Hawthorne, Jr., was the president of Hawthorne Golf. The board of directors was generally pleased with the company's performance under his leadership-the company hit the break-even point in its first year of operation and had a modest profit in 2013. Milo quit at the end of 2013 and went on to buy a golf course and open a pro shop. His replacement, Daryl Selmer, was apparently not as successful as Milo. Daryl argued that he was improving the company by getting rid of excess inventory, but the board noted that the company showed a $75,900 loss in the first year of his leadership. Production (units) Sales (units) Production cost per unit Sales Less cost of goods sold 2012 2013 2014 6,990 6,990 2,796 4,520 5,500 6,756 $1,190 $1,190 $1,625 $76,84,000 $93,50,000 $1,14,85,200 Gross margin Less selling and administrative Net income (loss) 23,05,200 53,78,800 65,45,000 92,55,900 23,05,200 28,05,000 22,29,300 23,05,200 23,05,200 $ 0 $ 4,99,800 ($ 75,900) (a) Recalculate net income for all three years using variable costing.
Hawthorne Golf, the maker of a sought-after set of golf clubs, was formed in 2012. The selling price for each golf club set is $1,700, variable production costs are $900 per unit, fixed production costs are $2,027,100 per year, and fixed selling and administrative costs are $2,305,200 per year. Data below indicate net income for 2012?2014 under full costing. In 2012 and 2013, Milo Hawthorne, Jr., was the president of Hawthorne Golf. The board of directors was generally pleased with the company's performance under his leadership-the company hit the break-even point in its first year of operation and had a modest profit in 2013. Milo quit at the end of 2013 and went on to buy a golf course and open a pro shop. His replacement, Daryl Selmer, was apparently not as successful as Milo. Daryl argued that he was improving the company by getting rid of excess inventory, but the board noted that the company showed a $75,900 loss in the first year of his leadership. Production (units) Sales (units) Production cost per unit Sales Less cost of goods sold 2012 2013 2014 6,990 6,990 2,796 4,520 5,500 6,756 $1,190 $1,190 $1,625 $76,84,000 $93,50,000 $1,14,85,200 Gross margin Less selling and administrative Net income (loss) 23,05,200 53,78,800 65,45,000 92,55,900 23,05,200 28,05,000 22,29,300 23,05,200 23,05,200 $ 0 $ 4,99,800 ($ 75,900) (a) Recalculate net income for all three years using variable costing.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Recalculate net income for all three years using variable costing.
Transcribed Image Text:Hawthorne Golf, the maker of a sought-after set of golf clubs, was
formed in 2012. The selling price for each golf club set is $1,700,
variable production costs are $900 per unit, fixed production costs are
$2,027,100 per year, and fixed selling and administrative costs are
$2,305,200 per year. Data below indicate net income for 2012?2014
under full costing. In 2012 and 2013, Milo Hawthorne, Jr., was the
president of Hawthorne Golf. The board of directors was generally
pleased with the company's performance under his leadership-the
company hit the break-even point in its first year of operation and had a
modest profit in 2013. Milo quit at the end of 2013 and went on to buy a
golf course and open a pro shop. His replacement, Daryl Selmer, was
apparently not as successful as Milo. Daryl argued that he was
improving the company by getting rid of excess inventory, but the board
noted that the company showed a $75,900 loss in the first year of his
leadership.
Production (units)
Sales (units)
Production cost per unit
Sales
Less cost of goods sold
2012
2013
2014
6,990
6,990
2,796
4,520
5,500
6,756
$1,190
$1,190
$1,625
$76,84,000 $93,50,000 $1,14,85,200
Gross margin
Less selling and administrative
Net income (loss)
23,05,200
53,78,800 65,45,000 92,55,900
23,05,200 28,05,000 22,29,300
23,05,200
23,05,200
$ 0
$ 4,99,800
($ 75,900)
(a) Recalculate net income for all three years using variable costing.
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