Produced 50,000 Sold Year ended December 31, Year 1 Year ended December 31, Year 2 40,000 50,000 55,000 Production costs per unit have not changed over the two-year period. Under variable costing, what is the amount of cost of sales relative to the cost of sales shown on the GAAP income statement of the company? Year 1 a. Higher b. Higher c. Lower d. Lower Year 2 Higher Lower Higher Lower

Produced 50,000 Sold Year ended December 31, Year 1 Year ended December 31, Year 2 40,000 50,000 55,000 Production costs per unit have not changed over the two-year period. Under variable costing, what is the amount of cost of sales relative to the cost of sales shown on the GAAP income statement of the company? Year 1 a. Higher b. Higher c. Lower d. Lower Year 2 Higher Lower Higher Lower

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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Model Company manufactures a single electronic product called Lastik. Lastik sells for P900 per unit. In 2019, the following variable costs were incurred to produce each Lastik device. Direct labor P180 Direct materials P240 Factory overhead P105 Selling costs P75 Total variable costs P600 Model is subject to 40 percent income tax rate, and annual fixed costs are P6,600,000. Except for an operating loss incurred in the year of incorporation, the firm has been profitable over the last five years. In 2020, a significant change in Model's production technology caused a 10% increase in annual fixed costs and a 20% unit cost increase in the direct labor component as a result of higher skilled direct labor. However, this change permitted the replacement of a costly imported component with a local component. The effect was to reduce unit material costs by 25%. There has been no change in the Lastik selling price. What sales volume in units and amount should Model Company achieve in order to…
Jayleen company makes two products: Carpet Kleen and Floor Deodorizer. Operating information from the previous year follows: Units produced and sold of Carpet Kleen = 5,000 Units produced and sold of Floor Deodorizer = 4,000 Machine hours used for Carpet clean = 5,000 Machine hours used for Floor Deodorizer = 1,000 Sales price per unit of carpet clean = $9 Sales price per unit of Floor Deodorizer = $15 Variable cost per unit of Carpet Clean = $7 Variable cost per unit of Floor deodorizer = $13 Fixed costs of $37,000 per year are presently allocated equally between both products. If the product mix were to changed, total fixed costs would remain the same. Assuming there is unlimed demand for both products and Jaleen has 18,500 hours available, how many units of each product should be produced and sold?
McNeil, inc manufactures and sells guitars. During June, McNeil started and completed the production of 300 guitars. McNeil engaged in the following transaction in june: A) Paid $68,000 for materials that were used to make guitars in June. B) Paid $94,000 wages to production workers C) Recorded $34,000 of depreciation on factory equipment D) Sold 260 guitars on account in June for $900 each. Mcneil recorded the cost of goods sold at the time of sale. Required: record the above transactions using the horizontal financial statements model. Be sure to identify the specific accounts affected by the transaction.
"Gardenia Company uses the weighted-average method. It had P8,000 of conversion cost in the beginning Work in Process Inventory ånd added P64,000 of conversion cost during 2019. The company completed 40,000 equivalent units for conversion costs during the year. The company had 10,000 units in the ending Work in Process Inventory that were 30% complete as to conversion. 25. The amount of conversion cost assigned to the unit in process. a. P12,600 b. P 5,400 c. P11,200 d. P 4,800
Road Warrior Corporation began operations early in the current year, building luxury motor homes. During the year, the company started and completed 50 motor homes at a cost of $60,000 per unit. Of these, 48 were sold for $95,000 each and two remain in finished goods inventory. In addition, the company had six partially completed units in its factory at year-end. Total costs for the year (summarized alphabetically) were as follows: $ 737,000 900,000 Direct materials used Direct labor General and administrative 500,000 expenses Income tax expense Manufacturing overhead Selling expenses 100,000 1,520,000 500,000 Instructions a. Compute the total manufacturing costs charged to work in process for the current year: Total manufacturing costs b. Compute the cost of finished goods manufactured for the current year: Cost of finished goods manufactured
ABC Corporation manufactures a product that gives rise to a by-product called Z. The only costs associated with Z are selling costs of P1 for each unit sold. ABC accounts for Z sales first b deducting its separable costs from such sales and then by deducting this net amount from cost of sales of the major product. This year, 1,000 units of Z were sold at P4 each. If ABC changes its method of accounting for Z sales by showing the net amount as additional sales revenue, ABC's gross margin would*a. decrease by P3,000b. increase by P4,000c. increase by P3,000d. be unaffected
Brian Pogi Co. manufactured the following units: Saleable 10,000 units Unsaleable Normal Loss 400 units Abnormal Loss 600 units Manufacturing costs totaled P198,000. a. How much is the period cost? b. What amount should the entity debit to finished goods?
Miller Company produces a single product. The company had the following results for its first two years of operation: year 1 year 2 sales 1,200,000 1,200,000 cogs 800,000 680,000 gross margin 400,000 520,000 selling and admin expenses 300,000 300,000 Net Operating Income 100,000 220,000 n Year 1, the company produced and sold 40,000 units of its only product; in Year 2, the company again sold 40,000 units, but increased production to 50,000 units. The company's variable production cost is P5 per unit and its fixed manufacturing overhead cost is P600,000 a year. Fixed manufacturing overhead costs are applied to the product on the basis of each year's unit production (i.e., a new fixed overhead rate is computed each year). Variable selling and administrative expenses are P2 per unit sold. d.What is the fixed overhead deferred under absorption costing in year 2?e.How do you reconcile the variable costing and absorption costing income figures for year 2?
For each of the following independent situations, calculate the missing values: 1. The Belen plant purchased $78,300 of direct materials during June. Beginning direct materials inventory was $2,500, and direct materials used in production were $73,500. What is ending direct materials inventory? 2. Forster Company produced 14,000 units at an average cost of $5.90 each. The beginning inventory of finished goods was $3,422. (The average unit cost was $5.90.) Forster sold 14,120 units. How many units remain in ending finished goods inventory? 3. Beginning work in process (WIP) was $116,000, and ending WIP was $117,300. If totalmanufacturing costs were $349,000, what was the cost of goods manufactured?4. If the conversion cost is $84 per unit, the prime cost is $55, and the manufacturing cost per unit is $105, what is the direct materials cost per unit? 5. Total manufacturing costs for August were $412,000. Prime cost was $64,000, and beginning WIP was $76,000. The cost of goods…
Axel Ltd. began operations on October 1 of the current year. Its production requires that direct materials be added at the beginning of the process, and conversion costs are incurred uniformly. Direct materials costs for October were $380,000, and conversion costs were $1,750,000. There were 80,000 units started during the month. The ending inventory was 25,000 units, which were 60% complete. What was the cost per equivalent unit for conversion? Round to the nearest cent. OA. $70.00 OB. $25.00 OC. $21.88 O D. $16.67 OE. $116.67