Prepare an absorption costing income statement with one column showing the results if 30,000 units are produced and one column showing the results if 35,000 units are produced. Why is income different for the two production levels when sales is 30,000 units either way?
Prepare an absorption costing income statement with one column showing the results if 30,000 units are produced and one column showing the results if 35,000 units are produced. Why is income different for the two production levels when sales is 30,000 units either way?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Hh1.
Account
Transcribed Image Text:TUTORIAL
TOPIC 5 (Part B)
Question 1
Graham is a division of Flynn, Inc. The division manufactures and sells a pump that is used in a
wide variety of applications. During the coming year, it expects to sell 30,000 units for $25 per
unit. Steve Moss, division manager, is considering producing either 30,000 or 35,000 units during
the period. Other information is presented in the schedule below:
Division Information - 2016
Beginning inventory
Expected sales in units
Selling price per unit
Variable manufacturing cost per unit
Fixed manufacturing overhead costs (total)
Fixed manufacturing overhead costs per unit
Based on 30,000 units ($420,000 + 30,000)
Based on 35,000 units ($420,000 + 35,000)
Manufacturing cost per unit
Based on 30,000 units ($7 variable + $14 fixed)
Based on 35,000 units ($7 variable + $12 fixed)
Selling and administrative expenses (all fixed)
0
30,000
$25
$7
$420,000
$14
$12
$21
$19
$25,000
Instructions
(a) Prepare an absorption costing income statement with one column showing the results if
30,000 units are produced and one column showing the results if 35,000 units are produced.
(b) Why is income different for the two production levels when sales is 30,000 units either way?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education