Mona reported $65,000 in net profit for the year using absorption costing.The company had no units in beginning inventory, planned and actualproduction was 20,000 units and sales were 18,000 units during the year.Variable manufacturing costs were $20 per unit and total budgeted fixedmanufacturing overhead was $100,000. There was no underapplied oroverapplied overhead reported during the year.Determine the net profit under variable costing.A. $115,000B. $75,000C. $65,000D. $55,000

To determine the net profit under variable costing, we need to understand the difference between…

Answered: Mona reported $65,000 in net profit for…

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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On October 31, the end of the first month of operations, Maryville Equipment Company prepared the following income statement, based on the variable costing concept: Line Item Description Amount Amount Sales (13,400 units) $750,400 Variable cost of goods sold: Variable cost of goods manufactured $343,200 Inventory, October 31 (2,200 units) (48,400) Total variable cost of goods sold (294,800) Manufacturing margin $455,600 Variable selling and administrative expenses (201,000) Contribution margin $254,600 Fixed costs: Fixed manufacturing costs $62,400 Fixed selling and administrative expenses 53,600 Total fixed costs (116,000) Operating income $138,600 Prepare an income statement under absorption costing. Round all final answers to whole dollars. Maryville Equipment CompanyAbsorption Costing Income StatementFor the Month Ended October 31 Line Item Description Amount Amount $Sales Cost of goods sold:…
Last month a manufacturing company’s profit was $ 2,000, calculated using absorption costing principles. If marginal costing principles had been used, a loss of # 3,000 would have occurred. The company fixed production cost is $2 per unit. Sales last month were 10,000 units. What was last month’s production (in units)? 7, 500 9,500 10,500 12,500
Jax Incorporated reports the following data for its only product. The company had no beginning finished goods inventory and it uses absorption costing. Sales price $ 56.70 per unit Direct materials $ 9.70 per unit Direct labor $ 7.20 per unit Variable overhead $ 11.70 per unit Fixed overhead $ 944,700 per year 1. Compute gross profit assuming (a) 67,000 units are produced and 67,000 units are sold and (b) 94,000 units are produced and 67,000 units are sold.2. By how much would the company’s gross profit increase or decrease from producing 27,000 more units than it sells?
Krepps Corporation produces a single product. Last year, Krepps manufactured 33,930 units and sold 28,300 units. Production costs for the year were as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Sales totaled $1,287,650 for the year, variable selling and administrative expenses totaled $164,140, and fixed selling and administrative expenses totaled $206,973. There was no beginning inventory. Assume that direct labor is a variable cost. The contribution margin per unit was: (Round your Intermediate calculations to 2 decimal places.) Multiple Choice $19.50 per unit $24.20 per unit O $18.40 per unit $288,405 $145,899 $288,405 $542,880 $13.90 per unit
Grainger Company produces only one product and sells that product for $110 per unit. Cost information for the product is as follows: Direct Material $16 per Unit Direct Labor $26 per Unit Variable Overhead $6 per Unit Fixed Overhead $27,200 Selling expenses are $5 per unit and are all variable. Administrative expenses of $20,000 are all fixed. Grainger produced 4,000 units; sold 3,200; and had no beginning inventory. A. Compute net income under i. Absorption Costing $fill in the blank 1 ii. Variable Costing $fill in the blank 2 B. Which costing method provide higher net income? By how much? The method provided more net income by $fill in the blank 4 .
Farris Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price Units in beginning inventory Units produced $ 172 0 9,700 9,300 400 Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense What is the net operating income (loss) for the month under variable costing? $6,000 $11,600 $17,600 ($40,000) $ 33 $75 $21 $ 25 $ 145,500 $ 10,300
The Southern Corporation manufactures a single product and has the following cost structure: Variable costs per unit: Production $ 33 Selling and administrative $ 16 Fixed costs per year: Production $ 130,830 Selling and administrative $ 107,280 Last year, 6,230 units were produced and 6,030 units were sold. There was no beginning inventory. The carrying value on the balance sheet of the ending inventory of finished goods under variable costing would be:
A company's operating income was $75,000 using variable costing for a given period. Beginning and ending inventories for that period were 46,000 units and 51,000 units, respectively. Ignoring income taxes, if the fixed factory overhead application rate was $8.10 per unit, what would operating income have been using full costing? Multiple Choice $32,250. $115,500. Cannot be determined from the information given. $150,000. $102,000.
Jax Incorporated reports the following data for its only product. The company had no beginning finished goods inventory and it uses absorption costing. Sales price $ 56.20 per unit Direct materials $ 9.20 per unit Direct labor $ 6.70 per unit Variable overhead $ 11.20 per unit Fixed overhead $ 781,200 per year 1. Compute gross profit assuming (a) 62,000 units are produced and 62,000 units are sold and (b) 84,000 units are produced and 62,000 units are sold.2. By how much would the company’s gross profit increase or decrease from producing 22,000 more units than it sells?
A company produced and sold 3,400 units of its only product this year. The sales price is $162 per unit. Fixed costs include overhead of $85,000 per year, and selling and administrative expenses of $68,000 per year. Variable costs per unit follow. Direct materials Direct labor Variable overhead Variable selling and administrative expenses Use variable costing to compute contribution margin. Variable expenses Contribution Margin (Variable Costing) $ 28 per unit $ 30 per unit $5 per unit 34 per unit
Bent Tree incurred the following unit costs during the year: variable manufacturing cost, $27; fixed manufacturing cost, $10; variable marketing and administrative cost, $8; and fixed marketing and administrative cost, $6. During the year, Bent Tree produced 30,000 units and sold 25,000 units of product. The selling price was $67 per unit. What was Bent Tree's total gross margin? Multiple Choice None of these. $1,000,000 $400,000 $750,000 $800,000
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