PR 8-35 (Algo) Variable-Costing and Absorption-Costing Income Statements (LO 8-2, 8-3, 8-4, 8-6) Great Outdoze Company manufactures sleeping bags, which sell for $66.50 each. The variable costs of production are as follows: Direct material Direct labor $18.60 10.50 7.90 Variable manufacturing overhead Budgeted fixed overhead in 20x1 was $192,500 and budgeted production was 25,000 sleeping bags. The year's actual production was 25,000 units, of which 21,500 were sold. Variable selling and administrative costs were $1.30 per unit sold; fixed selling and administrative costs were $24,000. Required: 1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing. 2-a. Prepare an operating income statement for the year using absorption costing. 2-b. Prepare an operating income statement for the year using variable costing. 3. Reconcile reported operating income under the two methods using the shortcut method.
PR 8-35 (Algo) Variable-Costing and Absorption-Costing Income Statements (LO 8-2, 8-3, 8-4, 8-6) Great Outdoze Company manufactures sleeping bags, which sell for $66.50 each. The variable costs of production are as follows: Direct material Direct labor $18.60 10.50 7.90 Variable manufacturing overhead Budgeted fixed overhead in 20x1 was $192,500 and budgeted production was 25,000 sleeping bags. The year's actual production was 25,000 units, of which 21,500 were sold. Variable selling and administrative costs were $1.30 per unit sold; fixed selling and administrative costs were $24,000. Required: 1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing. 2-a. Prepare an operating income statement for the year using absorption costing. 2-b. Prepare an operating income statement for the year using variable costing. 3. Reconcile reported operating income under the two methods using the shortcut method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:PR 8-35 (Algo) Variable-Costing and Absorption-Costing Income Statements (LO 8-2, 8-3, 8-4, 8-6)
Great Outdoze Company manufactures sleeping bags, which sell for $66.50 each. The variable costs of production are as follows:
Direct material
Direct labor
$18.60
10.50
7.90
Variable manufacturing overhead
Budgeted fixed overhead in 20x1 was $192,500 and budgeted production was 25,000 sleeping bags. The year's actual production
was 25,000 units, of which 21,500 were sold. Variable selling and administrative costs were $1.30 per unit sold; fixed selling and
administrative costs were $24,000.
Required:
1. Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing.
2-a. Prepare an operating income statement for the year using absorption costing.
2-b. Prepare an operating income statement for the year using variable costing.
3. Reconcile reported operating income under the two methods using the shortcut method.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2A
Absorption costing
Variable costing
Req 2B
Calculate the product cost per sleeping bag under (a) absorption costing and (b) variable costing.
Note: Do not round intermediate calculations. Round your final answers to 2 decimal places.
Req 3
Product Cost
Per Unit
< Req 1
Req 2A >
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