Problem 6-19 (Algo) Variable Costing Income Statement; Reconciliation [LO,6-1, LO6-2, LO6-3]During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows:Year 1Year 2$1,220,000 $1,830,000780,0001,170,000440,000313,000$ 127,000Sales (@ $61 per unit)Cost of goods sold (@ $39 per unit)Gross marginSelling and administrative expenses*Net operating income**$3 per unit variable; $253,000 fixed each year.The company's $39 unit product cost is computed as follows:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overhead ($450,000 ÷ 25,000 units)Absorption costing unit product costProduction and cost data for the first two years of operations are:Units producedUnits soldYear 125,00020,000Year 225,00030,000660,000343,000$ 317,000$710418$ 39Required:1. Using variable costing, what is the unit product cost for both years?2. What is the variable costing net operating income in Year 1 and in Year 2?3. Reconcile the absorption costing and the variable costing net operating income figures for each year.

The income statement can be prepared using different methods as variable costing and absorption…

Answered: Problem 6-19 (Algo) Variable Costing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Exercise 18-8 (Algo) Computing missing amounts in contribution margin Income statements LO A1 Compute the missing amounts in the contribution income statement shown below: (Round "Per Unit" answers to 2 decimal places.) Company A Company B Number of units sold Sales Variable costs Contribution margin Fixed costs Income 2,375 Total $ 465,000 $ 97.00 Per unit Total Per unit 302,400 123,500 166,250 $ 108,000 61,750
Show Me How Question Content Area Break-Even Sales Under Present and Proposed Conditions Portmann Company, operating at full capacity, sold 1,000,000 units at a price of $188 per unit during the current year. Its income statement is as follows: Sales $188,000,000 Cost of goods sold (99,000,000) Gross profit $89,000,000 Expenses: Selling expenses $15,000,000 Administrative expenses 14,900,000 Total expenses (29,900,000) Operating income $59,100,000 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program for the following year that will permit an increase of $11,280,000 in yearly sales. The expansion will increase fixed costs by $3,500,000 but will not affect the relationship between sales and variable costs.Determine the maximum operating income…
s Problem 1-22 (Algo) Cost Terminology; Contribution Format Income Statement [LO1-2, LO1-4, LO1-6] Miller Company's total sales are $192,000. The company's direct labor cost is $23,040, which represents 30% of its total conversion cost and 40% of its total prime cost. Its total selling and administrative expense is $28,800 and its only variable selling and administrative expense is a sales commission of 5% of sales. The company maintains no beginning or ending inventories and its manufacturing overhead costs are entirely fixed costs. Required: 1. What is the total manufacturing overhead cost? 2. What is the total direct materials cost? 3. What is the total manufacturing cost? 4. What is the total variable selling and administrative cost? 5. What is the total variable cost? 6. What is the total fixed cost? 7. What is the total contribution margin? 1. Total manufacturing overhead cost 2. Total direct materials cost 3. Total manufacturing cost 4. Total variable selling and administrative…
Jacquie Inc. reports the following annual cost data for its single product. Normal production and sales level Sales price 73,000 units 57.30 per unit 10.30 per unit 7.80 per unit 12.30 per unit $1,160,700 in total Direct materials $ Direct labor Variable overhead $ Fixed overhead Complete the below table using absorption costing. (Round cost per unit answers to 2 decimal places.) Production volume Cost of goods sold: 73,000 units 106,000 units Cost of goods sold per unit Number of units sold Total cost of goods sold
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Department A $ 350,000 120,000 230,000 140,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Multiple Choice O $(133,800) The company says that $110,000 of the fixed expenses being charged to Department B are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department B is discontinued the sales in Department A will drop by 6%. What is the financial advantage (disadvantage) of discontinuing Department B? O $(128,000) $(113,800) Total $ 800,000 320,000 480,000 400,000 $ 80,000 O $(124,000) Department B $ 450,000 200,000 250,000 260,000 $90,000 $ (10,000)
Aj.2 Required information Skip to question [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 100,000 Variable expenses 65,000 Contribution margin 35,000 Fixed expenses 30,100 Net operating income $ 4,900 5. If sales decline to 900 units, what would be the net operating income? Note: Round "Per Unit" calculations to 2 decimal places.
Problem 12-21 (Algo) Prepare a contribution margin format income statement; answer what-if questions LO 12-7, 12-8, 12-9 Shown here is an income statement in the traditional format for a firm with a sales volume of 7,500 units. Cost formulas also are shown: Revenues Cost of goods sold ($5,900 + $2.25/unit) Gross profit Operating expenses: Selling ($1,200 + $0.10/unit) Administrative ($3,500 + $0.20/unit) Operating income $34,400 22,775 $ 11,625 1,950 5,000 $ 4,675 Required: a. Prepare an income statement in the contribution margin format. b. Calculate the contribution margin per unit and the contribution margin ratio. c. Calculate the firm's operating income (or loss) if the volume changed from 7,500 units to 1. 11,250 units. 2. 3,750 units. d. Refer to your answer to part a for total revenues of $34,400. Calculate the firm's operating income (or loss) if unit selling price and variable expenses per unit do not change and total revenues 1. Increase by $14,500. 2. Decrease by $3,000.
Exercise 11-15A (Algo) Using contribution margin format income statement to measure the magnitude of operating leverage LO 11-3, 11-4 The following income statement was drawn from the records of Benson, a merchandising firm: BENSON COMPANY Income Statement For the Year Ended December 31 Sales revenue (4,500 units × $163) $ 733,500 Cost of goods sold (4,500 units × $82) (369,000 ) Gross margin 364,500 Sales commissions (5% of sales) (36,675 ) Administrative salaries expense (85,000 ) Advertising expense (34,000 ) Depreciation expense (48,000 ) Shipping and handling expenses (4,500 units × $3) (13,500 ) Net income $ 147,325 Required Reconstruct the income statement using the contribution margin format. Calculate the magnitude of operating leverage. Use the measure of operating leverage to determine the amount of net income Benson will earn if sales increase by 20 percent.
Question 2 The following monthly data in contribution format are available for the Ross Company and its only product. Product SD: Sales Variable expenses Contribution margin Fixed expenses Net operating income Total $ $ $ $ $ 381,600 304.800 76,800 34,500 42,300 Per Unit $ 5 159 127 32 The company produced and sold 2,400 units during the month and had no beginning or ending inventories. a) What is the current operating leverage? b) Projections indicate that the market will worsen by 15% next month. What is the projected net operating income given this increase?
Current Attempt in Progress Some financial information for each of three companies is reflected below in columns A, B, and C. Use your knowledge of CVP relationships to fill in the missing pieces numbered (1) through (9). Consider each company (i.e., column) separately. (Round variable cost per unit and contribution margin ratio to 2 decimal places, e.g. 0.24.) Selling price Total fixed costs Sales volume (units) Variable cost/unit Operating income Tax rate After-tax profit Contribution margin ratio A $6 $13,100 29,000 $40,840 (1) % (2) $28,588 (3) B $800 2,500 $384 25% $684,375 (4) (5) (6) с $389,000 $30.24 $229,240 40% 0.64
05 quired information [The following information applies to the questions displayed below.] Hudson Company reports the following contribution margin income statement. Sales (9,700 units at $280 each) Variable costs (9,700 units at $210 each) Contribution margin Fixed costo Income HUDSON COMPANY Contribution Margin Income Statement. For Year Ended December 31 1. Amount of sales 2. Margin of safety $ 2,716,000 2,037,000 1. Assume Hudson has a target income of $163,000. What amount of sales (in dollars) is needed to produce this target income? 2. If Hudson achieves its target income, what is its margin of safety (in percent)? (Round your answer to 1 decimal place.) % 679,000 441,000 $ 238,000
Hudson Company reports the following contribution margin income statement. \table[[\table[[HUDSON COMPANY], [Contribution Margin Income Sta], [For Year Ended December 3]],], [\table [[Sales units at $225 each)], [Variable costs units at $180 each)], [Contribution margin], [Fixed costs]],\table[[$2,160,000

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