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manufactures video games that it sells for $43 each. The company uses a fixed manufacturing overhead allocation rate of $6 per game. Assume all costs and production levels are exactly as planned. The following data are from Arcade Away's first two months in business: Data table 1. 2. 3. Variable manufacturing cost per game Sales commission cost per game Total fixed manufacturing overhead 16,200 Total fixed selling and administrative costs 11,500 Requirements 4. a. Sales Production b. Prepare monthly income statements for October and In Compute the product cost per game produced under absorption costing and under variable costing. October November, including columns for each month and a total column, using these costing methods: 31 and 1,900 units 2,700 units $13 7 November Is operating income higher under absorption costing or variable costing in October? November 2,800 units 2,700 units $13 7 16,200 November? Explain the pattern of differences in operating income based on absorption costing versus variable costing. Question content area bottom 11,500 Determine the balance in Finished Goods Inventory on October Total product cost per game $19 November Absorption Variable costing costing 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based on absorption costing versus variable costing. absorption costing. Part 1 Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing. October Absorption Variable costing costing $13 variable costing.

manufactures video games that it sells for $43 each. The company uses a fixed manufacturing overhead allocation rate of $6 per game. Assume all costs and production levels are exactly as planned. The following data are from Arcade Away's first two months in business: Data table 1. 2. 3. Variable manufacturing cost per game Sales commission cost per game Total fixed manufacturing overhead 16,200 Total fixed selling and administrative costs 11,500 Requirements 4. a. Sales Production b. Prepare monthly income statements for October and In Compute the product cost per game produced under absorption costing and under variable costing. October November, including columns for each month and a total column, using these costing methods: 31 and 1,900 units 2,700 units $13 7 November Is operating income higher under absorption costing or variable costing in October? November 2,800 units 2,700 units $13 7 16,200 November? Explain the pattern of differences in operating income based on absorption costing versus variable costing. Question content area bottom 11,500 Determine the balance in Finished Goods Inventory on October Total product cost per game $19 November Absorption Variable costing costing 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based on absorption costing versus variable costing. absorption costing. Part 1 Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing. October Absorption Variable costing costing $13 variable costing.

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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manufactures video games that it sells for $43 each. The company uses a fixed manufacturing overhead allocation rate of $6 per game. Assume all costs and production levels are exactly as planned. The following data are from Arcade Away's first two months in business: Data table 1. 2. Variable manufacturing cost per game Sales commission cost per game Total fixed manufacturing overhead 16,200 Total fixed selling and administrative costs 11,500 Requirements 3. 4. Sales Production a. Prepare monthly income statements for October and b. Compute the product cost per game produced under absorption costing and under variable costing. In October 1,900 units 2,700 units $13 7 November, including columns for each month and a total column, using these costing methods: 31 and November November 2,800 units 2,700 units $13 7 Is operating income higher under absorption costing or variable costing in October? 16,200 Question content area bottom 11,500 November? Explain the pattern of differences in operating income based on absorption costing versus variable costing. Determine the balance in Finished Goods Inventory on October Total product cost per game $19 November Absorption Variable costing costing 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based on absorption costing versus variable costing. absorption costing. Part 1 Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing. October Absorption Variable costing costing $13 variable costing.
Transcribed Image Text:manufactures video games that it sells for $43 each. The company uses a fixed manufacturing overhead allocation rate of $6 per game. Assume all costs and production levels are exactly as planned. The following data are from Arcade Away's first two months in business: Data table 1. 2. Variable manufacturing cost per game Sales commission cost per game Total fixed manufacturing overhead 16,200 Total fixed selling and administrative costs 11,500 Requirements 3. 4. Sales Production a. Prepare monthly income statements for October and b. Compute the product cost per game produced under absorption costing and under variable costing. In October 1,900 units 2,700 units $13 7 November, including columns for each month and a total column, using these costing methods: 31 and November November 2,800 units 2,700 units $13 7 Is operating income higher under absorption costing or variable costing in October? 16,200 Question content area bottom 11,500 November? Explain the pattern of differences in operating income based on absorption costing versus variable costing. Determine the balance in Finished Goods Inventory on October Total product cost per game $19 November Absorption Variable costing costing 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based on absorption costing versus variable costing. absorption costing. Part 1 Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing. October Absorption Variable costing costing $13 variable costing.
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