Big Pros Inc. calculates income under absorption costing. The company provides bonuses to managers based on the operating income of the division. In 2021,the Body division has the following financial results:Sales (50,000 units)6,000,000Cost of Goods SoldOpening Inventory2$Cost of Goods Manufactured (60,000 units)Variable Costs2$1,500,000Fixed Costs1,500,0003,000,0001 Ending Inventory2 COGS3 Gross Margin-24500,000$2,500,0003,500,0004 Selling and Admin ExpensesVariable2$500,000Fixed2$800,0001,300,000B Operating Income2,200,000O The old manager for the Body division left in early 2021. A new manager was hired in 2022. The new manager produced 55,000 units and sold 58,000 units in 2022.2 REQUIRED3 A) Calculate the operating income for 2022 using absorption costing. Use an income statement to show your work.4 B) Calculate the operating income for 2022 using variable costing. Do not use an income statement as part of your calculation.

Under Variable Costing Method, only Variable cost of production are included to calculate the…

Ig Pros inc. calculates income under absorption costing. company provic bonuses to managers in 2021, he Body division has the following financial results: ales (50,000 units) ost of Goods Sold $ 6,000,000 Opening Inventory Cost of Goods Manufactured (60,000 units) Variable Costs 1,500,000 Fixed Costs 1,500,000 3,000,000 nding Inventory OGS ross Margin elling and Admin Expenses -$ 500,000 2,500,000 3,500,000 Variable 500,000 Fixed $ 800,000 1,300,000 "perating Income 2,200,000 he old manager for the Body division left in early 2021. A new manager was hired in 2022. The new manager produced 55,000 units and sold 58,000 units in 2022. EQUIRED ) Calculate the operating income for 2022 using absorption costing. Use an income statement to show your work. ) Calculate the operating income for 2022 using variable costing. Do not use an income statement as part of your calculation.

Ig Pros inc. calculates income under absorption costing. company provic bonuses to managers in 2021, he Body division has the following financial results: ales (50,000 units) ost of Goods Sold $ 6,000,000 Opening Inventory Cost of Goods Manufactured (60,000 units) Variable Costs 1,500,000 Fixed Costs 1,500,000 3,000,000 nding Inventory OGS ross Margin elling and Admin Expenses -$ 500,000 2,500,000 3,500,000 Variable 500,000 Fixed $ 800,000 1,300,000 "perating Income 2,200,000 he old manager for the Body division left in early 2021. A new manager was hired in 2022. The new manager produced 55,000 units and sold 58,000 units in 2022. EQUIRED ) Calculate the operating income for 2022 using absorption costing. Use an income statement to show your work. ) Calculate the operating income for 2022 using variable costing. Do not use an income statement as part of your calculation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Inventory Accounting

Inventory accounting is that branch of accounting that helps in determining the specific value of assets at different stages of production and development.

Question

Big Pros Inc. calculates income under absorption costing. The company provides bonuses to managers based on the operating income of the division. In 2021,
the Body division has the following financial results:
Sales (50,000 units)
6,000,000
Cost of Goods Sold
Opening Inventory
2$
Cost of Goods Manufactured (60,000 units)
Variable Costs
2$
1,500,000
Fixed Costs
1,500,000
3,000,000
1 Ending Inventory
2 COGS
3 Gross Margin
-24
500,000
$
2,500,000
3,500,000
4 Selling and Admin Expenses
Variable
2$
500,000
Fixed
2$
800,000
1,300,000
B Operating Income
2,200,000
O The old manager for the Body division left in early 2021. A new manager was hired in 2022. The new manager produced 55,000 units and sold 58,000 units in 2022.
2 REQUIRED
3 A) Calculate the operating income for 2022 using absorption costing. Use an income statement to show your work.
4 B) Calculate the operating income for 2022 using variable costing. Do not use an income statement as part of your calculation.

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