ceive full credit you must show youras a template.Practice Problems1)Corp sells several products. Information on average revenue and costs is as follows:Selling price per unit$28.50Variable costs per unit:Direct material$5.50Direct manufacturing labor $1.15Manufacturing overhead $0.85Selling costs$2.50$125,000ulationsAnnual fixed costsHow much is operating income if the company sells 15,000 units?2) If the company decides to lower its selling price by 10%, the operating income is reduced by howr hour:firm (this is conceptually similar to the O/H allocationyear 2015, O/H cost estimates total $840,000 for an2015, it decided to evaluate the use of additionalined that number of design changes, setups, andllowing information was gathered during the analysis:S0!Activity level300 design changes5,000 setups8,000 inspectionspital Systems, are expected to use the followinglospital Systems76,00001038e O/H cost estimate for Money Managers fora deluxe model. The following activity andNumber ofLabor Hours255245ed on DLH. What is the total amount ofas activity-cost drivers for O/H. AssumingI amount of O/H costs assigned to the

Practice Problems 1)Corp sells several products. Informa Selling price per unit Variable costs per unit: Direct material Direct manufacturing labor Manufacturing overhead Selling costs Annual fixed costs $1 How much is operating income if the 2) If the company decides to lower its

Practice Problems 1)Corp sells several products. Informa Selling price per unit Variable costs per unit: Direct material Direct manufacturing labor Manufacturing overhead Selling costs Annual fixed costs $1 How much is operating income if the 2) If the company decides to lower its

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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V. Prepare a CONTRIBUTION MARGIN (also known as variable costing) income statement given a traditional (also known as absorption costing) income statement Bruno Industries manufactures and sells a single product. The controller has prepared the following income statement for the most recent year: B C D 1 2 3 Bruno Industries Traditional Income Statement (Absorption Costing) For the Year Ended December 31 4 5 Sales revenue 6 Less: Cost of goods sold 7 Gross profit 8 Less: Operating expenses 9 Operating income $ 406,000 329,000 $ 77,000 73,000 $ 4,000 10 The company produced 8,000 units and sold 7,000 units during the year ending December 31. Fixed manufacturing overhead (MOH) for the year was $152,000, while fixed operating expenses were $62,000. The company had no beginning inventory. Requirements 1. Will the company's operating income under variable costing be higher, lower, or the same as its operating income under absorption costing? Why? 2. Prepare a variable costing income…
Companion Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $57 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 46% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $28 Direct labor 16 Factory overhead (46% of direct labor) 7.36 Total cost per unit $51.36 If Companion Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 14% of the direct labor costs.
Cost-Based Pricingand Markups with Variable CostsCompu Services provides computerized inventory consulting. The office and computer expenses are $600,000 annually and are not assigned to specific jobs. The consulting hours available for the year total 20,000, and the average consulting hour has $30 of variable costs.(a) If the company desires a profit of $160,000, what should it charge per hour?$Answer(b) What is the markup on variable costs if the desired profit is $240,000?Answer %(c) If the desired profit is $60,000, what is the markup on variable costs to cover (1) unassigned costs and (2) desired profit?Markup to cover unassigned costs Answer %Markup to cover desired profits Answer %
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The following income statements illustrate different cost structures for two competing companies: Number of customers (a) Sales revenue (a x $230) Variable cost (a x $185) Contribution margin Fixed cost Net income Required Income Statements Required A Required B a. Reconstruct Gibson's income statement, assuming that it serves 178 customers when it lures 89 customers away from Franklin by lowering the sales price to $130 per customer. b. Reconstruct Franklin's income statement, assuming that it serves 178 customers when it lures 89 customers away from Gibson by lowering the sales price to $130 per customer. Complete this question by entering your answers in the tabs below. GIBSON COMPANY Income Statement Sales revenue Variable cost Contribution margin Fixed cost Net income (loss) Reconstruct Gibson's income statement, assuming that it serves 178 customers when it lures 89 customers away from Franklin by lowering the sales price to $130 per customer. $ Company Name Franklin 89 $ Gibson…
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