Income Statements under Absorption Costing and Variable CostingFresno Industries Inc. manufactures and sells high-quality camping tents. The company began operations on January 1 and operated at 100% of capacity(70,400 units) during the first month, creating an ending inventory of 6,400 units. During February, the company produced 64,000 units during the monthbut sold 70,400 units at $90 per unit. The February manufacturing costs and selling and administrative expenses were as follows:Manufacturing costs in February 1beginning inventory:VariableFixedTotalManufacturing costs in February:VariableFixedTotalSelling and administrative expenses inFebruary:VariableFixedTotalNumberofUnitsCost of goods sold:6,400 $36.006,400 14.0064,00064,000UnitCost70,40070,400TotalCost$230,40089,600$50.00 $320,000$36.00 $2,304,00015.40 985,600$51.40 $3,289,600$18.20 $1,281,2807.00 492,800$25.20 $1,774,080a. Prepare an income statement according to the absorption costing concept for the month ending February 28.Fresno Industries Inc.Absorption Costing Income StatementFor the Month Ended February 28Line Item Description Amount Amount b. Prepare an income statement according to the variable costing concept for the month ending February 28.Fresno Industries Inc.Variable Costing Income StatementFor the Month Ended February 28Line Item Description Amount AmountFixed costs:c. What is the reason for the difference in the amount of operating income reported in (a) and (b)?Under themethod, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Underall of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventorydecreases, theincome statement will have a lower operating income.

Fresno Industries IncAbsorption Costing income statementFor the month ended Feb 28Sale Revunue $…

Industries Inc. manufactures and sells high-quality camping tents. The compa O units) during the first month, creating an ending inventory of 6,400 units. D 70,400 units at $90 per unit. The February manufacturing costs and selling cturing costs in February 1 ing inventory: Number of Units 6.100 Unit Cost Total Cost $36.00 $230 400

Industries Inc. manufactures and sells high-quality camping tents. The compa O units) during the first month, creating an ending inventory of 6,400 units. D 70,400 units at $90 per unit. The February manufacturing costs and selling cturing costs in February 1 ing inventory: Number of Units 6.100 Unit Cost Total Cost $36.00 $230 400

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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Adams Company makes a single product that it sells for $8.45 per unit. Provided below is information about this product for the past nine months: Month January February March April May June July August September Total Cost Incurred $28,730 $24,580 $30,660 $16,890 $19,120 $20,610 $17,490 $25,380 $15,540 Units Sold 6,400 5,150 6,900 2,950 3,600 4,150 3,350 5,500 2,700 Adams Company expects to sell 4,620 units of this product during October. Using the high-low method, calculate Adams Company's expected margin of safety for October.
Required information [The following information applies to the questions displayed below.] Shadee Corp. expects to sell 530 sun visors in May and 350 in June. Each visor sells for $25. Shadee’s beginning and ending finished goods inventories for May are 80 and 50 units, respectively. Ending finished goods inventory for June will be 60 units. Suppose that each visor takes 0.70 direct labor hours to produce and Shadee pays its workers $9 per hour. Required: Determine Shadee's budgeted direct labor cost for May and June.
Data concerning Dakota Enterprises' operations last year appear below: Units in the Beginning Inventory -0- Units Units Produced 4,000 Units Units Sold 3,900 Units Selling Price Per Unit $140 Variable Costs Per Unit: Direct Material $41 Direct Labor 43 Manufacturing Overhead 6 Sellling and Administrative Costs 4 Fixed Costs in Total: Manufacturing Overhead $84,000 Selling and Administrative Costs 39,000 Match each of the following items with the proper amount. Unit Product Cost , Using Absorption Costing Unit Gross Margin…
Walsh Company manufactured 30,000 units during July. There were no units in inventory on July 1. Costs and expenses for July were as follows: Total Num Total Cost Number of Units Unit Cost Manufacturing costs: Variable $660,000 30,000 $22.00 Fixed 300,000 30,000 10.00 Total 960,000 Selling and administrative expenses: Variable $200,000 Fixed 160,000 Total. $360,000 If the company sells 25,000 units at $75 (units manufactured exceed units sold), prepare an income statement for July using: b. Variable costing
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Zachary Corporation paid one of its sales representatives $8,500 during the month of March. The rep is paid a base salary plus $11 per unit of product sold. During March, the rep sold 170 units. Required Calculate the total monthly cost of the sales representative's salary for each of the following months. Month Number of units sold i Total variable cost Total fixed cost Total salary cost $ April 210 0 $ May 120 0 $ June 220 0 $ July 130 0
2. Lens Junction has required production of 15,400 units in January and 18,100 in February. Each lens consists of 2 pounds of silicon costing $2.50 per pound and 3 ounces of solution costing $3 per ounce. Desired inventory levels are: Jan. Feb. Mar. Beginning Inventory: Finished Goods (units) 4,500 4,900 5,000 DM - Silicon (pounds) 8,500 9,100 9,200 DM - Solution (ounces) 11,200 12,000 13,000 PLEASE NOTE: Units are rounded to whole numbers with commas as needed (i.e. 1,234) - no labels. All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345), except for any "per" amounts (units, pounds, ounces, or dollars), which are rounded to two decimal places and shown with "$" and commas as needed (i.e. $1,234.56) - no labels. Cost per Pound Desired Ending Inventory DM per Unit Ounces Needed for Production Required DM Ounces Pounds Needed for Production Units to be Produced Total Cost of DM Purchase Required DM Pounds…
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6. Required information Skip to question [The following information applies to the questions displayed below.]Ferris Company began January with 4,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January are as follows: Purchases Date of Purchase Units Unit Cost* Total Cost Jan. 10 3,000 $ 9 $ 27,000 Jan. 18 4,000 10 40,000 Totals 7,000 67,000 * Includes purchase price and cost of freight. Sales Date of Sale Units Jan. 5 2,000 Jan. 12 1,000 Jan. 20 3,000 Total 6,000 5,000 units were on hand at the end of the month. 5. Calculate January's ending inventory and cost of goods sold for the month using Average cost, perpetual system. (Round average cost per unit to 4 decimal places. Enter sales with a negative sign.)
Fanning Corporation paid one of its sales representatives $4,000 during the month of March. The rep is paid a base salary plus $11 per unit of product sold. During March, the rep sold 150 units. Required Calculate the total monthly cost of the sales representative's salary for each of the following months. Month April May June July Number of units sold Total variable cost Total fixed cost Total salary cost 190 100 200 110 24 $
Joplin Company Absorption Costing Income Statement For the Month Ended April 30 Sales (2,500 units) Cost of goods sold: Cost of goods manufactured (2,900 units) Inventory, April 30 (400 units) Total cost of goods sold Gross profit Selling and administrative expenses Operating income $75,400 (10,400) $92,500 (65,000) $27,500 (16,050) $11,450 If the fixed manufacturing costs were $18,096 and the fixed selling and administrative expenses were $7,860, prepare an income statement according to the i variable costing concept. Round all final answers to whole dollars.
3. Required information Skip to question [The following information applies to the questions displayed below.]Ferris Company began January with 4,000 units of its principal product. The cost of each unit is $8. Merchandise transactions for the month of January are as follows: Purchases Date of Purchase Units Unit Cost* Total Cost Jan. 10 3,000 $ 9 $ 27,000 Jan. 18 4,000 10 40,000 Totals 7,000 67,000 * Includes purchase price and cost of freight. Sales Date of Sale Units Jan. 5 2,000 Jan. 12 1,000 Jan. 20 3,000 Total 6,000 5,000 units were on hand at the end of the month.