Problem 3 (Variable Costing Income Statement; Reconciliation) During Floppy'Company's first two years of operations, the company reported net operating income as follows (absorption costing basis): Year 1 Year 2 Sales (at P50 per unit) Less cost of goods sold: Beginning inventory Add cost of goods manufactured (at P34 per unit) Goods available for sale P1,000,000 P1,500,000 170,000 850,000 850,000 170,000 680,000 320,000 310,000 P 10,000 850,000 1,020,000 Less ending inventory (at P34 per unit) Cost of goods sold Gross margin Less selling and administrative expenses* Net operating income 1,020,000 480,000 340,000 P 140,000 * P3 per unit variable; P250,000 fixed each year.

Problem 3 (Variable Costing Income Statement; Reconciliation) During Floppy'Company's first two years of operations, the company reported net operating income as follows (absorption costing basis): Year 1 Year 2 Sales (at P50 per unit) Less cost of goods sold: Beginning inventory Add cost of goods manufactured (at P34 per unit) Goods available for sale P1,000,000 P1,500,000 170,000 850,000 850,000 170,000 680,000 320,000 310,000 P 10,000 850,000 1,020,000 Less ending inventory (at P34 per unit) Cost of goods sold Gross margin Less selling and administrative expenses* Net operating income 1,020,000 480,000 340,000 P 140,000 * P3 per unit variable; P250,000 fixed each year.

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 4MCQ

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Compute for the net operating income under variable costing for year 1 Puif Company's absorption costing income statements for the last two years are presented below: Year 1 Year 2 Sales $70,000 $90,000 Less cost of goods sold: Beginning inventory Add cost of goods manufactured 6,000 48,000 48,000 Goods available for sale 48,000 54,000 Less ending inventory | Cost of goods sold Gross margin Less selling & admin. expenses 6,000 42,000 54,000 28,000 36,000 25,000 31,000 |Net operating income $ 3,000 $ 5,000 Data on units produced and sold in each of these years are given below: Year 1 Year 2 Units in beginning inventory Units produced Units sold 1,000 8,000 8,000 7,000 9,000 Fixed factory overhead totaled $16,000 in each year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.
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D1.
ANSWER 1&2
Smithen Company, a wholesale distributor, has been operating for only a few months. The company sells three products-sinks, mirrors, and vanities. Budgeted sales by product and in total for the coming month are shown below based on planned unit sales as follows: Sinks Mirrors Vanities Total Units 1,000 500 500 2,000 Percentage of total sales Sales Variable expenses Contribution margin Contribution margin per unit Fixed expenses Operating income Break-even point in unit sales: Percentage sex 25% 25% 100% Break-even point in sales dollars: Total Fixed expenses. Weighted-average CM per unit Sinks 48% Product Mirrors 20% $264,000 100.00% $110,000 100.00% $176,000 100.00% $550,000 100.00% 80,000 30.30% 72,000 65.45% 82,000 46.59% 219,300 39.87% 53.41% 60.13% $184,000 $ 94,000 330,700 69.70% 38,000 34.55% S 76.00 $ 184.00 $ 188.00 Fixed expenses Overall CM ratio $293,300 $158.00 Vanities 32% $293,300 0.60 1,856.33 units Total 100% 293,300 $ 37,400 = $487,798.61 *($184.00 0.50) + ($76.00 x…
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A. Manufacturing margin? b. Contribution margin? C. Operating income for PhiladelPho's company ?
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The level of inventory of a manufactured product has increased by 8,413 units during a period. The following data are also available: Varlable Fixed Unit manufacturing costs of the period $11.00 $6.00 Unit operating expenses of the period 1.00 4.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) Oa. $50,478 increase Ob. s50,478 decrease Oc. s84,130 decrease Od. S84,130 increase Pre Submit Tes