Northern Company reported the following information for the first three years of operations. Year 1 Year 2 Year 3 Units produced 15,000 12,000 $4 $24,000 $3 $14,000 20,000 20,000 19,200 $4 $24,000 $24,000 $3 $14,000 $14,000 24,000 24,000 26,000 $4 Units sold Variable production cost per unit Fixed production cost Variable selling cost per unit Fixed selling cost Normal overhead base (in units) $3 16,000 Assume fixed overhead is applied based on the normal overhead base for each year. 13. If the company had an operating income of $18,500 in Year 2 under variable costing, what was their operating income under absorption costing in Year 2? a. $22,300 b. $18,700 c. $18,300 d. $19,300 e. $19,460 f. $18,260 g. $19,780 h. None of the above If the company had an operating income of $37,400 in Year 3 under absorption costing, what was their operating income under variable costing in Year 3? a. $38,900 b. $36,700 c. $40,160 d. $39,400 e. $38,500 f. $39,800 g. $40,400 h. None of the aboye 14.

Northern Company reported the following information for the first three years of operations. Year 1 Year 2 Year 3 Units produced 15,000 12,000 $4 $24,000 $3 $14,000 20,000 20,000 19,200 $4 $24,000 $24,000 $3 $14,000 $14,000 24,000 24,000 26,000 $4 Units sold Variable production cost per unit Fixed production cost Variable selling cost per unit Fixed selling cost Normal overhead base (in units) $3 16,000 Assume fixed overhead is applied based on the normal overhead base for each year. 13. If the company had an operating income of $18,500 in Year 2 under variable costing, what was their operating income under absorption costing in Year 2? a. $22,300 b. $18,700 c. $18,300 d. $19,300 e. $19,460 f. $18,260 g. $19,780 h. None of the above If the company had an operating income of $37,400 in Year 3 under absorption costing, what was their operating income under variable costing in Year 3? a. $38,900 b. $36,700 c. $40,160 d. $39,400 e. $38,500 f. $39,800 g. $40,400 h. None of the aboye 14.

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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ed Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($60 per unit) Year 1 $ Year 2 $ 1,920,000 3,960,000 Cost of goods sold ($45 per unit) 1,440,000 2,970,000 Gross profit 480,000 990,000 Selling and administrative expenses ok Income t 338,000 474,000 $ 142,000 $ 516,000 Additional Information a. Sales and production data for these first two years follow. Year 1 Year 2 nces Units Units produced 49,000 49,000 Units sold 32,000 66,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $45 per unit product cost using absorption costing consists of the following. Direct materials Direct labor $ 12 19 Variable overhead Fixed overhead ($539,000/49,000 units) 3 11 Total product cost per unit $ 45 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and…
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PROBLEM I, During the year 200A, Wouie Corporation's production was equal to its normal capacity of 1,000 units, It sold 900 units at a price of P50 per unit, The following costs were incurred during the year: Total Cost P 12,000 10,000 8,000 6,000 4,500 Cost per Unit P 12 Direct Materials Direct Labor 10 Variable Factory Overhead Fixed Factory Overhead & 8 Variable Selling Administrative Expenses Fixed Selling & Administrative Expenses 3,000 3 Variable selling and administrative cost per unit = Total / Units Sold = P 4,500 / 900 = P 5 Required: 1. Product cost per unit under absorption and variable costing 2. Income under absorption and variable costing 3. Computation of and accounting for the difference in income
A-1
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% N Diego Company manufactures one product that is sold for $75 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 46,000 units and sold 42,000 units. W Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense S Break even point The company sold 31,000 units in the East region and 11,000 units in the West region. It determined that $200,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $38,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product. 9. If the sales volumes in the East…
Dowell Company produces a single product. Its Income under variable costing for its first two years of operation follow. Variable Costing Income Income Units Units produced Units sold Additional Information a. Sales and production data for these first two years follow. Year 1 $ 43,000 Year 1 44,300 33,000 Direct materials Direct labor Variable overhead Fixed overhead ($430,000/43,000 units) Total product cost per unit Variable costing income Year 2 b. The company's $32 per unit product cost (for both years) using absorption costing consists of the following. Absorption costing income 44,300 55,600 Year 2 $ 610,000 Required: Prepare a statement to convert variable costing income to absorption costing income for both years. (Leave no cells blank - be certain to enter "0" wherever required.) $6 Dowell Company Convert Variable Costing Income to Absorption Costing Income Year 1 $ 9 7 10 $32 43,000 $ Year 2 610,000
Trio Company reports the following information for the current year, which is its first year of operations. Direct materials $ 14 per unit Direct labor $ 19 per unit Overhead costs for the year Variable overhead $ 2 per unit Fixed overhead $ 100,000 per year Units produced this year 25,000 units Units sold this year 19,000 units Ending finished goods inventory in units 6,000 units
A company selling a single product with the cost of producing and selling a single unit of this product at the company's normal activity level of 60000 units per year. Direct material $5.10 Direct labor $3.80 Variable management overhead $1.00 Fixed manufacturing overhead $4.70 Variable selling and administrative expenses $1.50 Fixed selling and administrative expense $2.40 Capacity per year 75000 units Normal selling price per unit $21.00 Question: an order was received as a mail-order house for 15000 units at $14.00 per unit. This order would not affect the company's regular sales or the companies total fixed cost. What is the financial advantage or disadvantage of accept this special order? Thank you,
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $25 per unit) $ 1,000,000 $ 1,250,000 Cost of goods sold (@ $18 per unit) 720,000 900,000 Gross margin 280,000 350,000 Selling and administrative expenses* 210,000 230,000 Net operating income $ 70,000 $ 120,000 *$2 per unit variable; $130,000 fixed each year. The company’s $18 unit product cost is computed as follows: Direct materials $ 4 Direct labor 7 Variable manufacturing overhead 1 Fixed manufacturing overhead ($270,000 ÷ 45,000 units) 6 Absorption costing unit product cost $ 18 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 45,000 45,000 Units sold 40,000 50,000 Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net…
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