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PROBLEM I, Silva Corporation uses an absorption costing system for internal reporting purposes, At present, however, it is considering to use the variable costing system, Following are some data regarding Silva Corporation's budgeted and actual operations for

PROBLEM I, Silva Corporation uses an absorption costing system for internal reporting purposes, At present, however, it is considering to use the variable costing system, Following are some data regarding Silva Corporation's budgeted and actual operations for

FINANCIAL ACCOUNTING
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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PROBLEM III, Silva Corporation uses an absorption costing system for internal reporting purposes, At present, however, it is considering to use the variable costing system, Following are some data regarding Silva Corporation's budgeted and actual operations for the calendar year 2008: BUDGETED 25,200 18,480 8,400 10,640 16,800 14,700 4,200 6,300 104,720 COSTS ACTUAL 23,400 17,160 7,800 10,000 15,000 14,700 3,750 6,375 98,185 Materials Labor Variable Factory Overhead Fixed Factory Overhead Variable Selling Expenses Fixed Selling Expenses Variable Administrative Expenses Fixed Administrative Expenses Actual Budgeted (Units) (Units) Finished Goods Beginning Inventory Production Sales 280 280 1,120 1,120 1,040 1,000 The budgeted costs were computed based on the budgeted production and sales of 1,120 units, the company's normal capacity level, Silva Corporation uses a predetermined factory overhead rate for applying manufacturing overhead costs to its product, The denominator level used in developing the predetermined rate is the firm's normal capacity. Any over- or underapplied factory overhead cost is closed to cost of goods sold at the end of the year, There are no work-in-process inventories at either the beginning or end of the year, The actual selling price was the same as the amount planned, P130 per unit, The previous year's planned per unit manufacturing costs were the same as the current planned unit manufacturing cost, The beginning inventory of finished goods for absorption costing purposes was valued at such per unit manufacturing cost, Required: 1, The standard product costs per unit under absorption and variable costing 2, The manufacturing cost variances under absorption and variable costing 3, Silva Corporation's operating income under both absorption and variable costing methods 4, The values of Silva Corporation's actual ending finished goods inventory under absorption and variable costing methods 5, Silva Corporation's total fixed costs expensed this year on both costing methods 6, Silva Corporation's actual manufacturing contribution margin for the year calculated on the variable costing basis 7, Silva Corporation's actual contribution margin for the year calculated on the variable costing basis 8, The total variable costs expensed currently by Silva Corporation on both the absorption and variable costing basis 9, The difference between Silva Corporation's operating income calculated on absorption and variable costing basis
Transcribed Image Text:PROBLEM III, Silva Corporation uses an absorption costing system for internal reporting purposes, At present, however, it is considering to use the variable costing system, Following are some data regarding Silva Corporation's budgeted and actual operations for the calendar year 2008: BUDGETED 25,200 18,480 8,400 10,640 16,800 14,700 4,200 6,300 104,720 COSTS ACTUAL 23,400 17,160 7,800 10,000 15,000 14,700 3,750 6,375 98,185 Materials Labor Variable Factory Overhead Fixed Factory Overhead Variable Selling Expenses Fixed Selling Expenses Variable Administrative Expenses Fixed Administrative Expenses Actual Budgeted (Units) (Units) Finished Goods Beginning Inventory Production Sales 280 280 1,120 1,120 1,040 1,000 The budgeted costs were computed based on the budgeted production and sales of 1,120 units, the company's normal capacity level, Silva Corporation uses a predetermined factory overhead rate for applying manufacturing overhead costs to its product, The denominator level used in developing the predetermined rate is the firm's normal capacity. Any over- or underapplied factory overhead cost is closed to cost of goods sold at the end of the year, There are no work-in-process inventories at either the beginning or end of the year, The actual selling price was the same as the amount planned, P130 per unit, The previous year's planned per unit manufacturing costs were the same as the current planned unit manufacturing cost, The beginning inventory of finished goods for absorption costing purposes was valued at such per unit manufacturing cost, Required: 1, The standard product costs per unit under absorption and variable costing 2, The manufacturing cost variances under absorption and variable costing 3, Silva Corporation's operating income under both absorption and variable costing methods 4, The values of Silva Corporation's actual ending finished goods inventory under absorption and variable costing methods 5, Silva Corporation's total fixed costs expensed this year on both costing methods 6, Silva Corporation's actual manufacturing contribution margin for the year calculated on the variable costing basis 7, Silva Corporation's actual contribution margin for the year calculated on the variable costing basis 8, The total variable costs expensed currently by Silva Corporation on both the absorption and variable costing basis 9, The difference between Silva Corporation's operating income calculated on absorption and variable costing basis
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