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K Hamington Manufacturing manufactures a single product that it will sell for $76 per unit. The company is looking to project its operating income for its first two years of operations. Cost information for the single unit of its product is as follows: (Click the icon to view the data.) During its first year of operations, the company plans to manufacture 25,000 units and anticipates selling 21,000 of those units. During the second year of its operations, the company plans to manufacture 25,000 units and anticipates selling 26,000 units (it has units in beginning inventory for the second year from its first year of operations). Read the requirements. Requirement 1. Prepare an absorption costing income statement for (a) the first year of operations and (b) the second year of operations. Sales revenue Hamington Manufacturing Income Statement (Absorption Costing) (a) Year 1 (b) Year 2 $ 1,596,000 $ 1,976,000 1,344,000 1,664,000 252,000 312,000 125,000 135,000 127,000 $ 177,000 Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Requirement 2. Before you prepare the variable costing income statements for Hamington, predict the preparing the variable costing income statements. Hint: Calculate the variable costing operating incom difference in operating income as calculated using the following formula: Difference in operating incom Begin by calculating the difference in income each year using the formula provided. Year Change in inventory level in units Fixed MOH per unit Difference in operating income More info . Direct material per unit produced $38 Direct labor cost per unit produced $7 Variable manufacturing overhead (MOH) per unit produced $4 Variable operating expenses per unit sold $2 Fixed manufacturing overhead (MOH) for each year is $375,000, while fixed operating expenses for each year will be $83,000. Print Done - X ar without ubtracting the 1 2 x =

K Hamington Manufacturing manufactures a single product that it will sell for $76 per unit. The company is looking to project its operating income for its first two years of operations. Cost information for the single unit of its product is as follows: (Click the icon to view the data.) During its first year of operations, the company plans to manufacture 25,000 units and anticipates selling 21,000 of those units. During the second year of its operations, the company plans to manufacture 25,000 units and anticipates selling 26,000 units (it has units in beginning inventory for the second year from its first year of operations). Read the requirements. Requirement 1. Prepare an absorption costing income statement for (a) the first year of operations and (b) the second year of operations. Sales revenue Hamington Manufacturing Income Statement (Absorption Costing) (a) Year 1 (b) Year 2 $ 1,596,000 $ 1,976,000 1,344,000 1,664,000 252,000 312,000 125,000 135,000 127,000 $ 177,000 Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Requirement 2. Before you prepare the variable costing income statements for Hamington, predict the preparing the variable costing income statements. Hint: Calculate the variable costing operating incom difference in operating income as calculated using the following formula: Difference in operating incom Begin by calculating the difference in income each year using the formula provided. Year Change in inventory level in units Fixed MOH per unit Difference in operating income More info . Direct material per unit produced $38 Direct labor cost per unit produced $7 Variable manufacturing overhead (MOH) per unit produced $4 Variable operating expenses per unit sold $2 Fixed manufacturing overhead (MOH) for each year is $375,000, while fixed operating expenses for each year will be $83,000. Print Done - X ar without ubtracting the 1 2 x =

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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K Hamington Manufacturing manufactures a single product that it will sell for $76 per unit. The company is looking to project its operating income for its first two years of operations. Cost information for the single unit of its product is as follows: (Click the icon to view the data.) During its first year of operations, the company plans to manufacture 25,000 units and anticipates selling 21,000 of those units. During the second year of its operations, the company plans to manufacture 25,000 units and anticipates selling 26,000 units (it has units in beginning inventory for the second year from its first year of operations). Read the requirements. Requirement 1. Prepare an absorption costing income statement for (a) the first year of operations and (b) the second year of operations. Sales revenue Hamington Manufacturing Income Statement (Absorption Costing) (a) Year 1 (b) Year 2 $ 1,596,000 $ 1,976,000 1,344,000 1,664,000 252,000 312,000 125,000 135,000 127,000 $ 177,000 Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Requirement 2. Before you prepare the variable costing income statements for Hamington, predict the preparing the variable costing income statements. Hint: Calculate the variable costing operating incom difference in operating income as calculated using the following formula: Difference in operating incom Begin by calculating the difference in income each year using the formula provided. Year Change in inventory level in units Fixed MOH per unit Difference in operating income More info . Direct material per unit produced $38 Direct labor cost per unit produced $7 Variable manufacturing overhead (MOH) per unit produced $4 Variable operating expenses per unit sold $2 Fixed manufacturing overhead (MOH) for each year is $375,000, while fixed operating expenses for each year will be $83,000. Print Done - X ar without ubtracting the 1 2 x =
Transcribed Image Text:K Hamington Manufacturing manufactures a single product that it will sell for $76 per unit. The company is looking to project its operating income for its first two years of operations. Cost information for the single unit of its product is as follows: (Click the icon to view the data.) During its first year of operations, the company plans to manufacture 25,000 units and anticipates selling 21,000 of those units. During the second year of its operations, the company plans to manufacture 25,000 units and anticipates selling 26,000 units (it has units in beginning inventory for the second year from its first year of operations). Read the requirements. Requirement 1. Prepare an absorption costing income statement for (a) the first year of operations and (b) the second year of operations. Sales revenue Hamington Manufacturing Income Statement (Absorption Costing) (a) Year 1 (b) Year 2 $ 1,596,000 $ 1,976,000 1,344,000 1,664,000 252,000 312,000 125,000 135,000 127,000 $ 177,000 Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Requirement 2. Before you prepare the variable costing income statements for Hamington, predict the preparing the variable costing income statements. Hint: Calculate the variable costing operating incom difference in operating income as calculated using the following formula: Difference in operating incom Begin by calculating the difference in income each year using the formula provided. Year Change in inventory level in units Fixed MOH per unit Difference in operating income More info . Direct material per unit produced $38 Direct labor cost per unit produced $7 Variable manufacturing overhead (MOH) per unit produced $4 Variable operating expenses per unit sold $2 Fixed manufacturing overhead (MOH) for each year is $375,000, while fixed operating expenses for each year will be $83,000. Print Done - X ar without ubtracting the 1 2 x =
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