Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (12,800 x $45) $576,000 Manufacturing costs (12,800 units): Direct materials 350,720 Direct labor 83,200 Variable factory overhead 38,400 Fixed factory overhead 46,080 Fixed selling and administrative expenses 12,500 Variable selling and administrative expenses 15,200 The company is evaluating a proposal to manufacture 14,400 units instead of 12,800 units, thus creating an ending inventory of 1,600 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. Question Content Area a. 1. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. Marshall Inc.Absorption Costing Income StatementFor the Month Ending October 31 12,800 Units Manufactured 14,400 Units Manufactured $Sales $Sales Cost of goods sold: $Cost of goods manufactured $Cost of goods manufactured Inventory, October 31 Inventory, October 31 $Total cost of goods sold $Total cost of goods sold $Gross profit $Gross profit Selling and administrative expenses Selling and administrative expenses $Operating income $Operating income Feedback Area Feedback a. 1. Recall that under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead. Calculate unit cost for direct materials, direct labor, variable factory overhead, fixed factory overhead. Add together to get total unit cost. For 14,400 units, use the same unit costs for direct materials, direct labor, and variable overhead, but instead recalculate the fixed factory overhead and add this to obtain the unit cost at the 14,400 unit level. Sales - (cost of goods manufactured - Inventory, October 31) = Gross profit; gross profit - selling and administrative expenses = income from operations. Remember that the Inventory, October 31 adjustment will only be necessary at the 14,400 level. Question Content Area a. 2. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank. Marshall Inc.Variable Costing Income StatementFor the Month Ending October 31 12,800 Units Manufactured 14,400 Units Manufactured $Sales $Sales Variable cost of goods sold: $Variable cost of goods manufactured $Variable cost of goods manufactured Inventory, October 31 Inventory, October 31 $Total variable cost of goods sold $Total variable cost of goods sold $Manufacturing margin $Manufacturing margin Variable selling and administrative expenses Variable selling and administrative expenses $Contribution margin $Contribution margin Fixed costs: $Fixed factory overhead $Fixed factory overhead Fixed selling and administrative expenses Fixed selling and administrative expenses Total fixed costs $fill in the blank 710eed01f044f88_28 $fill in the blank 710eed01f044f88_29 $Operating income $Operating income

Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (12,800 x $45) $576,000 Manufacturing costs (12,800 units): Direct materials 350,720 Direct labor 83,200 Variable factory overhead 38,400 Fixed factory overhead 46,080 Fixed selling and administrative expenses 12,500 Variable selling and administrative expenses 15,200 The company is evaluating a proposal to manufacture 14,400 units instead of 12,800 units, thus creating an ending inventory of 1,600 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. Question Content Area a. 1. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank. Marshall Inc.Absorption Costing Income StatementFor the Month Ending October 31 12,800 Units Manufactured 14,400 Units Manufactured $Sales $Sales Cost of goods sold: $Cost of goods manufactured $Cost of goods manufactured Inventory, October 31 Inventory, October 31 $Total cost of goods sold $Total cost of goods sold $Gross profit $Gross profit Selling and administrative expenses Selling and administrative expenses $Operating income $Operating income Feedback Area Feedback a. 1. Recall that under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead. Calculate unit cost for direct materials, direct labor, variable factory overhead, fixed factory overhead. Add together to get total unit cost. For 14,400 units, use the same unit costs for direct materials, direct labor, and variable overhead, but instead recalculate the fixed factory overhead and add this to obtain the unit cost at the 14,400 unit level. Sales - (cost of goods manufactured - Inventory, October 31) = Gross profit; gross profit - selling and administrative expenses = income from operations. Remember that the Inventory, October 31 adjustment will only be necessary at the 14,400 level. Question Content Area a. 2. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank. Marshall Inc.Variable Costing Income StatementFor the Month Ending October 31 12,800 Units Manufactured 14,400 Units Manufactured $Sales $Sales Variable cost of goods sold: $Variable cost of goods manufactured $Variable cost of goods manufactured Inventory, October 31 Inventory, October 31 $Total variable cost of goods sold $Total variable cost of goods sold $Manufacturing margin $Manufacturing margin Variable selling and administrative expenses Variable selling and administrative expenses $Contribution margin $Contribution margin Fixed costs: $Fixed factory overhead $Fixed factory overhead Fixed selling and administrative expenses Fixed selling and administrative expenses Total fixed costs $fill in the blank 710eed01f044f88_28 $fill in the blank 710eed01f044f88_29 $Operating income $Operating income

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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Question Content Area

a. 1. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank.

Marshall Inc.Absorption Costing Income StatementFor the Month Ending October 31

	12,800 Units Manufactured	14,400 Units Manufactured
	$Sales	$Sales
Cost of goods sold:
	$Cost of goods manufactured	$Cost of goods manufactured
	Inventory, October 31	Inventory, October 31
	$Total cost of goods sold	$Total cost of goods sold
	$Gross profit	$Gross profit
	Selling and administrative expenses	Selling and administrative expenses
	$Operating income	$Operating income

Feedback Area

Feedback

a. 1. Recall that under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead. Calculate unit cost for direct materials, direct labor, variable factory overhead, fixed factory overhead. Add together to get total unit cost. For 14,400 units, use the same unit costs for direct materials, direct labor, and variable overhead, but instead recalculate the fixed factory overhead and add this to obtain the unit cost at the 14,400 unit level. Sales - (cost of goods manufactured - Inventory, October 31) = Gross profit; gross profit - selling and administrative expenses = income from operations. Remember that the Inventory, October 31 adjustment will only be necessary at the 14,400 level.

Question Content Area

a. 2. Prepare an estimated income statement, comparing operating results if 12,800 and 14,400 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank.

Marshall Inc.Variable Costing Income StatementFor the Month Ending October 31

	12,800 Units Manufactured	14,400 Units Manufactured
	$Sales	$Sales
Variable cost of goods sold:
	$Variable cost of goods manufactured	$Variable cost of goods manufactured
	Inventory, October 31	Inventory, October 31
	$Total variable cost of goods sold	$Total variable cost of goods sold
	$Manufacturing margin	$Manufacturing margin
	Variable selling and administrative expenses	Variable selling and administrative expenses
	$Contribution margin	$Contribution margin
Fixed costs:
	$Fixed factory overhead	$Fixed factory overhead
	Fixed selling and administrative expenses	Fixed selling and administrative expenses
Total fixed costs	$fill in the blank 710eed01f044f88_28	$fill in the blank 710eed01f044f88_29
	$Operating income	$Operating income

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Sales (12,800 x $45)	$576,000
Manufacturing costs (12,800 units):
Direct materials	350,720
Direct labor	83,200
Variable factory overhead	38,400
Fixed factory overhead	46,080
Fixed selling and administrative expenses	12,500
Variable selling and administrative expenses	15,200