**b. Prepare an income statement according to the variable costing concept.****Gallatin County Motors Inc.** **Variable Costing Income Statement** **For the Month Ended July 31**- **Sales:** `$` - **Variable Cost of Goods Sold:** `$` - **Variable Selling and Administrative Expenses:** `$` - **Total Variable Costs:** `$` - **Contribution Margin:** `$` **Fixed Costs:**- **Fixed Manufacturing Costs:** `$` - **Fixed Selling and Administrative Expenses:** `$` - **Total Fixed Costs:** `$` - **Operating Income:** `$` **c. What is the reason for the difference in the amount of operating income reported in (a) and (b)?**Under the **absorption costing** method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under **variable costing**, all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the **variable costing** income statement will have a higher operating income. # Income Statements under Absorption Costing and Variable CostingGallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% capacity during the first month. The following data summarize the results for July:**Sales (12,000 units):** $1,920,000**Production costs (15,000 units):**- **Direct materials:** $888,000- **Direct labor:** $426,000- **Variable factory overhead:** $213,000- **Fixed factory overhead:** $142,500 **Total Production Costs:** $1,669,500**Selling and administrative expenses:**- **Variable selling and administrative expenses:** $258,800- **Fixed selling and administrative expenses:** $100,200 **Total Selling and Administrative Expenses:** $359,000If required, round interim per-unit calculations to the nearest cent.## Task**a.** Prepare an income statement according to the absorption costing concept.### Gallatin County Motors Inc.### Absorption Costing Income Statement#### For the Month Ended July 31- [Sales Revenue] : $________- [Cost of Goods Sold] : $________- [Gross Profit] : $________- [Selling and Administrative Expenses] : $________- [Net Income] : $________

The net income is calculated as the difference between the revenue and expenses. The contribution…

Answered: Income Statements under Absorption…

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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1. COMPUTE THE UNIT PRODUCT COST UNDER ABSORPTION COSTING 2. COMPUTE THE UNIT PRODUCT COST UNDER VARIABLE COSTING
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (17,000 units) $2,040,000 Production costs (22,000 units): Direct materials $976,800 Direct labor 468,600 Variable factory overhead 235,400 Fixed factory overhead 156,200 1,837,000 Selling and administrative expenses: Variable selling and administrative expenses $284,700 Fixed selling and administrative expenses 110,200 394,900 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Shawnee Motors Inc. Absorption Costing Income Statement For the Month Ended August 31 Sales $2,040000.00 Cost of goods sold fill in the blank Gross profit $620,500.00…
Income Statements under Absorption Costing and Variable Costing Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity (161,000 units) during the first month, creating an ending inventory of 20,000 units. During February, the company produced 141,000 units during the mont but sold 161,000 units at $520 per unit. The February manufacturing costs and selling and administrative expenses were as follows: Number of Units Unit Total Cost Cost Manufacturing costs in February 1 beginning inventory: Variable 20,000 $260.00 $5,200,000 Fixed 20,000 40.00 800,000 Total $300.00 $6,000,000 Manufacturing costs in February: Variable Fixed Total 141,000 $260.00 $36,660,000 141,000 46.20 6,514,200 $306.20 $43,174,200 Selling and administrative expenses in February: Variable 161,000 $30.80 $4,958,800 Fixed 161,000 4.00 644,000 $34.80 $5,602,800 Total This information has been collected in the Microsoft Excel…
Bullseye Company manufactures dartboards. Its standard cost information follows: Direct materials (cork board) Direct labor Standard Quantity 0.50 square feet 0.90 hour Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($21,750/87,000) Bullseye has the following actual results for the month of September: Number of units produced and sold Number of square feet of corkboard purchased and used Cost of corkboard used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 0.90 hour Standard Price (Rate) $ 1.30 per square feet $5.00 per hour $0.50 per hour 74,000 43,000 $ 47,200 80,000 $ 98,000 $ 103,880 $ 33,000 Standard Unit Cost $ 0.65 4.50 0.45 0.25 Required: 1. Calculate the fixed overhead spending variance for Bullseye. Note: Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). 2. Calculate the fixed overhead volume variance…
The section of Waterways that produces controllers for the company provided the following information. Sales for month of February 4,200 Variable manufacturing cost per unit $10.00 Sales price per unit $43.00 Fixed manufacturing overhead cost (per month for controllers) $83,000 Variable selling and administrative expenses per unit $2.90 Fixed selling and administrative expenses (per month for controllers) $13,250 Using this information for the controllers, determine the contribution margin ratio, the degree of operating leverage, the break-even point in dollars, and the margin of safety ratio for Waterways Corporation on this product. Contribution Margin Ratio (Round to 0 decimal places, e.g. 25%.) % Degree of Operating Leverage (Round to 2 decimal places, e.g. 5.25.) Break-even Point in Dollars $ Margin of Safety Ratio (Round to 1 decimal place, e.g. 5.2%.) %
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Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 5 Direct labor 10 Variable manufacturing overhead 3 Variable selling and administrative 1 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 108,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 277,000 The product sells for $48 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 27,000 23,000 August 27,000 31,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales $ 1,104,000 $1,488,000 Cost of goods sold 506,000 682,000 Gross margin 598,000 806, 000 Selling and administrative expenses 192,000 200,000 Net operating income $ 406,000 $ 606,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable…
The following information was collected for the first year of manufacturing for Appliance Apps: Direct Materials per Unit $2.50 Direct Labor per Unit $1.50 Variable Manufacturing Overhead per Unit $0.25 Variable Selling and Administration Expenses $1.75 Units Produced 39,000 Units Sold 35,000 Sales Price $12 Fixed Manufacturing Expenses $117,000 Fixed Selling and Administration Expenses $20,000 Question Content Area Prepare an income statement under variable costing method. Appliance AppsIncome Statement $- Select - - Select - $- Select - - Select - $- Select - - Select - - Select - $- Select - Question Content Area Prepare a reconciliation to the income under the absorption method. Appliance AppsReconciliation $- Select - - Select - $- Select -
All information included
Income Statements under Absorption Costing and Variable Costing Crazy Mountain Sports Inc. assembles and sells snowmobile engines. The company began operations on March 1 and operated at 100% of capacity during the first month. The following data summarize the results for March: Sales (15,500 units) Production costs (20,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative es: Variable selling and administrative expenses Fixed selling and administrative expenses $740,000 356,000 178,000 118,000 1,392,000 $215,800 $1,550,000 For the Month Ended March 31 Line Item Description Amount 83,500 299,300 If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. Crazy Mountain Sports Inc. Absorption Costing Income Statement
Rip Tide Company manufactures surfboards. Its standard cost information follows: Direct materials (fiberglass) Direct labor Variable manufacturing overhead (based on direct labor hours) Fixed manufacturing overhead ($27,000 ÷ 250 units) Rip Tide has the following actual results for the month of June: Number of units produced and sold Number of square feet of fiberglass purchased and used Cost of fiberglass used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost View transaction list Journal entry worksheet A Required: 1 & 2. Prepare the journal entries to record the direct materials, direct labor costs and related variances for Rip Tide. Note: If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations and round your final answers to nearest dollar amount. B Standard Quantity 13.5 square feet 9.8 hours 9.8 hours Record the entry for direct materials costs…
A company manufacturing two products furnishers the following data for a year: Product Annual Total Total number Total Output (units) of purchase orders machine number of hours set ups A 750 1200 85 15 B 450 800 115 10 1200 2000 200 25 The annual overheads are as under: Volume related activity costs RO 55000 Set up related costs RO 120000 Purchase related costs RO 85000 Total RO 260000 You are required to calculate the cost per unit of each product A and B based on: a. Traditional method of charging overheads b. Activity based costing method

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