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Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $157. The varlable and fixed cost data are as follows Direct labor $100.00 Overhead Variable cost per unit $9 Fixed cost Marketing general and administrative Variable cost (per service contract completed) Administrative expenses (foxed- annual cost) $100.000 $10.00 $42,000 During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year. a. Calculate reported income for management.

Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $157. The varlable and fixed cost data are as follows Direct labor $100.00 Overhead Variable cost per unit $9 Fixed cost Marketing general and administrative Variable cost (per service contract completed) Administrative expenses (foxed- annual cost) $100.000 $10.00 $42,000 During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year. a. Calculate reported income for management.

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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How do I calculate a reported income for management?

Variable and Absorption Costing-Service Company Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $157. The variable and fixed cost data are as follows: Direct labor $100.00 Overhead Variable cost per unit $9 Fixed cost $100,000 Marketing, general and administrative Variable cost (per service contract completed) $10.00 Administrative expenses (fixed- annual cost) $42,000 During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year. a. Calculate reported income for management. Do not use negative signs with any answers. Absorption Costing Income Statement Sales $ 1,491,500 Cost of Goods Sold: Beginning Inventory 24 Variable Costs 90,000 x Fixed Cost 100,000 v Less: Ending Inventory Cost of Goods Sold Gross profit Selling expense 0 x Administrative expense Net Income 24 b. Calculate reported income for the bank. Do not use negative signs with any answers. Variable Costing Income Statement Sales $ 1,491,000 x Cost of Goods Sold: Beginning Inventory Variable Costs Less: Ending inventory Variable cost of goods sold 0 x Variable sellingexpense 0 x Gross profit 0 x Fixed costs:
Transcribed Image Text:Variable and Absorption Costing-Service Company Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $157. The variable and fixed cost data are as follows: Direct labor $100.00 Overhead Variable cost per unit $9 Fixed cost $100,000 Marketing, general and administrative Variable cost (per service contract completed) $10.00 Administrative expenses (fixed- annual cost) $42,000 During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year. a. Calculate reported income for management. Do not use negative signs with any answers. Absorption Costing Income Statement Sales $ 1,491,500 Cost of Goods Sold: Beginning Inventory 24 Variable Costs 90,000 x Fixed Cost 100,000 v Less: Ending Inventory Cost of Goods Sold Gross profit Selling expense 0 x Administrative expense Net Income 24 b. Calculate reported income for the bank. Do not use negative signs with any answers. Variable Costing Income Statement Sales $ 1,491,000 x Cost of Goods Sold: Beginning Inventory Variable Costs Less: Ending inventory Variable cost of goods sold 0 x Variable sellingexpense 0 x Gross profit 0 x Fixed costs:
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