Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,491 per unit and then sells themto retail customers for an average price of $3,200 each. The company's selling and administrative costs for a typical month arepresented below:CostsSelling:AdvertisingSales salaries and commissionsDelivery of pianos to customersUtilitiesCost Formula$960 per month$4,813 per month, plus 4% of sales$57 per piano sold$632 per month$4,934 per monthDepreciation of sales facilitiesAdministrative:Executive salariesInsuranceClericalDepreciation of office equipmentDuring August, Marwick's Pianos, Incorporated, sold and delivered 62 pianos.$13,486 per month$712 per month$2,487 per month, plus $37 per piano sold$857 per monthRequired:1. Prepare a traditional format income statement for August.2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per-unit basis downthrough contribution margin.

The income statement is prepared in traditional format (or using absorption costing) and…

Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,491 per unit and then sells them to retail customers for an average price of $3,200 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Cost Formula $960 per month $4,813 per month, plus 4% of sales $57 per piano sold $632 per month $4,934 per month $13,486 per month $712 per month $2,487 per month, plus $37 per piano sold $857 per month Executive salaries Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 62 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per-unit basis down through contribution margin.

Marwick's Pianos, Incorporated, purchases pianos from a manufacturer for an average cost of $1,491 per unit and then sells them to retail customers for an average price of $3,200 each. The company's selling and administrative costs for a typical month are presented below: Costs Selling: Advertising Sales salaries and commissions Delivery of pianos to customers Utilities Depreciation of sales facilities Administrative: Cost Formula $960 per month $4,813 per month, plus 4% of sales $57 per piano sold $632 per month $4,934 per month $13,486 per month $712 per month $2,487 per month, plus $37 per piano sold $857 per month Executive salaries Insurance Clerical Depreciation of office equipment During August, Marwick's Pianos, Incorporated, sold and delivered 62 pianos. Required: 1. Prepare a traditional format income statement for August. 2. Prepare a contribution format income statement for August. Show costs and revenues on both a total and a per-unit basis down through contribution margin.

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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Game Depot manufactures video games that it sells for $39 each. The company uses a fixed manufacturing overhead allocation rate of $4 per game. Assume all costs and production levels are exactly as planned. The following data are from Game Depot's first two months in business: (Click the icon to view the data.) Data table Sales Production Variable manufacturing cost per game Sales commission cost per game Total fixed manufacturing overhead Total fixed selling and administrative costs Print $ October 2,000 units 2,300 units 11 $ 6 Done 9,200 9,000 November 2,500 units 2,300 units 11 6 9,200 9,000 Requirements ▷ 1. Compute the product cost per game produced under absorption costing and under variable costing. 2. Prepare monthly income statements for October and November, including columns for each month and a total column, using these costing methods: absorption costing. a. b. variable costing. 3. Is operating income higher under absorption costing or variable costing in October? In…
Star Company produces and sells two products, J and R. Revenue and cost information for the two products from last month is given below: selling price per unit variable costs per unit Product J $14.90 $ 5.30 Product R $15.80 $ 8.70 Each month Star Company has 60,000 direct labor hours available and 72,000 machine hours available. Product J requires 8 direct labor hours for each unit and 4 machine hours for each unit. Product R requires 6 direct labor hours for each unit and 9 machine hours for each unit. For the coming month, Star Company would like to use linear programming in order to maximize its monthly profits. Calculate the number of units of Product that should be produced in order to maximize net income.
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost Information relating to the products follow: Selling price per unit Variable expenses per unit Product Weedban $ 6.00 $ 2.40 $ 45,000 Greengrow $ 7.50 $ 5.25 $ 21,000 Traceable fixed expenses per year Last year the company produced and sold 15,000 units of Weedban and 28,000 units of Greengrow. Its annual common fixed expenses are $33,000. Required: Prepare a contribution format Income statement segmented by product lines. × Answer is not complete. Product Line Total Company Weedban Sales Variable expenses Contribution margin $ 300,000 $ 90,000 183,000 → 38,000 ✔ Greengrow $ 210,000 147,000 117,000 54,000 63,000 Traceable fixed expenses Gross margin 66,000 45,000 63,000 x x 51,000 $ 9,000 $ 0 33,000 Net operating income S 18,000
Gorman Nurseries Inc. grows poinsettias and fruit trees in a green house/nursery operation. The following information was provided for the coming year. Poinsettias Fruit Trees Sales $970,000 $3,100,000 Variable cost of goods sold 460,000 1,630,000 Direct fixed overhead 160,000 200,000 A sales commission of 4% of sales is paid for each of the two product lines. Direct fixed selling and administrative expense was estimated to be $146,000 for the poinsettia line and $87,000 for the fruit tree line. Common fixed overhead for the nursery operation was estimated to be $800,000; common selling and administrative expense was estimated to be $450,000. Required: Prepare a segmented income statement for Gorman Nurseries for the coming year, using variable costing. Note: Enter all amounts as positive numbers except operating loss, if applicable.
Jake's Roof Repair has provided the following data concerning its costs: Fixed Cost Cost per per Month $ 21,200 Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses Repair-Hour $15.00 $ 7.50 $ 0.50 $ 1.60 $ 2,770 $ 5,710 $ 4,680 $ 3,870 Rent Administrative expenses $ 0.40 For example, wages and salaries should be $21,200 plus $15.00 per repair-hour. The company expected to work 2,800 repair-hours in May, but actually worked 2,700 repair-hours. The company expects its sales to be $44.00 per repair-hour. Required: Compute the company's activity variances for May. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)
Jake's Roof Repair has provided the following data concerning its costs: Wages and salaries Parts and supplies Fixed Cost per Month $20,600 Cost per Repair-Hour $15.00 $ 7.30 Equipment depreciation $ 2,750 $ 0.35 Truck operating expenses $ 5,710 $ 1.70 Rent $ 4,670 Administrative expenses $ 3,820 $ 0.50 For example, wages and salaries should be $20,600 plus $15.00 per repair-hour. The company expected to work 3,000 repair-hours in May, but actually worked 2,900 repair-hours. The company expects its sales to be $49.00 per repair-hour. Required: Compute the company's activity variances for May. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.) Jake's Roof Repair Activity Variances For the Month Ended May 31 Revenue Expenses: Wages and salaries Parts and supplies Equipment depreciation Truck operating expenses Rent Administrative expenses Total expense Net…
Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,100 kayaks and sold 850 at a price of $1,100 each. At year-end, the company reported the following income statement information using absorption costing. Sales (850 × $1,100) $ 935,000 Cost of goods sold (850 × $425) 361,250 Gross profit 573,750 Selling and administrative expenses 220,000 Income $ 353,750 Additional Information a. Product cost per kayak under absorption costing totals $425, which consists of $325 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $110,000 of fixed overhead per year divided by 1,100 kayaks produced.b. The $220,000 in selling and administrative expenses consists of $85,000 that is variable and $135,000 that is fixed.Prepare an income statement for the current year under variable costing.
Evansville Company had the following transactions for the month. Number Cost of Units per Unit Purchase $8,000 Purchase 6 9,000 Purchase 9,500 Calculate the gross margin for each of the following cost allocation methods, assuming Evansville sold just one unit of these goods for $10,000. Round your intermediate calculations and final answers to the nearest dollar amount. Gross Margin A. First-in, First-out (FIFO) B. Last-in, First-out (LIFO) C. Weighted Average (AVG) When prices are rising (inflation), which costing method would produce the highest value for gross margin?
Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,025 kayaks and sold 775 at a price of $1,025 each. At year-end, the company reported the following income statement information using absorption costing. Sales (775 × $1,025) $ 794,375 Cost of goods sold (775 × $500) 387,500 Gross profit 406,875 Selling and administrative expenses 250,000 Income $ 156,875 Additional Information a. Product cost per kayak under absorption costing totals $500, which consists of $400 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $102,500 of fixed overhead per year divided by 1,025 kayaks produced.b. The $250,000 in selling and administrative expenses consists of $105,000 that is variable and $145,000 that is fixed.Prepare an income statement for the current year under variable costing.
Munoz Trophies makes and sells trophies it distributes to little league ballplayers. The company normally produces and sells between 6,000 and 12,000 trophies per year. The following cost data apply to various activity levels: Required Complete the preceding table by filling in the missing amounts for the levels of activity shown in the first row of the table. (Round "Cost per unit" answers to 2 decimal places.) Number of Trophies 6,000 8,000 10,000 12,000 Total costs incurred Fixed $ 64,000 Variable 42,000 Total costs $ 106,000 $ Cost per unit Fixed 2$ 10.67 Variable 7.00 Total cost per trophy 24 17.67 0.00 0.00 S 0.00
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