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irect materials... irect labor... ariable factory ov xed factory overh ixed marketing an D0 units were s

irect materials... irect labor... ariable factory ov xed factory overh ixed marketing an D0 units were s

FINANCIAL ACCOUNTING
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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The chief executive officer of Acadia, Inc. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Acadia, Inc. be used to prepare comparative statements using variable costing and the company's absorption costing. The data follow: Direct materials... $ 90,000 Direct labor . 120,000 Variable factory overhead. 60,000 Fixed factory overhead. 150,000 Fixed marketing and administrative expense.. 180,000 The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000. 1. Prepare an income statement using variable costing. 2. Prepare an income statement using absorption costing. (Round unit costs to three decimal places.)
Transcribed Image Text:The chief executive officer of Acadia, Inc. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Acadia, Inc. be used to prepare comparative statements using variable costing and the company's absorption costing. The data follow: Direct materials... $ 90,000 Direct labor . 120,000 Variable factory overhead. 60,000 Fixed factory overhead. 150,000 Fixed marketing and administrative expense.. 180,000 The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000. 1. Prepare an income statement using variable costing. 2. Prepare an income statement using absorption costing. (Round unit costs to three decimal places.)
Calculation of variable and fixed cost per unit: $ Amount Units Rate Materials: $90,000 80,000 $1.125 per unit Direct labor: $120,000 80,000 $1.500 per unit Variable factory overhead: $60,000 80,000 $0.750 per unit Fixed overhead: $150,000 80,000 $1.875 per unit Acadia, Inc. Statement of Income-Variable Costing Sales Variable cost of goods sold: Materials Direct labor Variable overhead Manufacturing margin Fixed costs: Fixed overhead Fixed marketing and administrative expense Net income Acadia, Inc. Statement of Income-Absorption Costing Sales Cost of goods sold: Materials Direct labor Variable overhead Fixed overhead Gross margin on sales Less: Fixed marketing and administrative expense Net income II II I| I| II
Transcribed Image Text:Calculation of variable and fixed cost per unit: $ Amount Units Rate Materials: $90,000 80,000 $1.125 per unit Direct labor: $120,000 80,000 $1.500 per unit Variable factory overhead: $60,000 80,000 $0.750 per unit Fixed overhead: $150,000 80,000 $1.875 per unit Acadia, Inc. Statement of Income-Variable Costing Sales Variable cost of goods sold: Materials Direct labor Variable overhead Manufacturing margin Fixed costs: Fixed overhead Fixed marketing and administrative expense Net income Acadia, Inc. Statement of Income-Absorption Costing Sales Cost of goods sold: Materials Direct labor Variable overhead Fixed overhead Gross margin on sales Less: Fixed marketing and administrative expense Net income II II I| I| II
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