**QS 21-20B Absorption Costing Income Statement**Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,800 rackets and sold 5,700. Each racket was sold at a price of $98. Fixed overhead costs are $93,840, and fixed selling and administrative costs are $66,000. The company also reports the following per unit costs for the year:- Variable production costs: $25.80- Variable selling and administrative expenses: $2.80**Required:**Prepare an income statement under absorption costing.---**ACES INC.****Absorption Costing Income Statement**- **Sales**: $558,600 **Less: Cost of goods sold** - Variable production costs: $147,060 - Fixed overhead costs: - Cost of goods sold: $147,060(Note: The income statement is incomplete in the image and further details or calculations would be needed to complete the full income statement.)

Variable costing means that inventory is valued at variable manufacturing cost and fixed cost is…

QS 21-20B Absorption costing income statement LO P5 Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,800 rackets and sold 5,700. Each racket was sold at a price of $98. Fixed overhead costs are $93,840, and fixed selling and administrative costs are $66,000. The company also reports the following per unit costs for the year: Variable production costs Variable selling and administrative expenses $25.80 $ 2.80 Required: Prepare an income statement under absorption costing. ACES INC. Absorption Costing Income Statement Sales 24 558,600 Less: Cost of goods sold Variable production costs 147.060 Fixed overhead costs Cost of goods sold 147,060

QS 21-20B Absorption costing income statement LO P5 Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,800 rackets and sold 5,700. Each racket was sold at a price of $98. Fixed overhead costs are $93,840, and fixed selling and administrative costs are $66,000. The company also reports the following per unit costs for the year: Variable production costs Variable selling and administrative expenses $25.80 $ 2.80 Required: Prepare an income statement under absorption costing. ACES INC. Absorption Costing Income Statement Sales 24 558,600 Less: Cost of goods sold Variable production costs 147.060 Fixed overhead costs Cost of goods sold 147,060

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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EXERCISE 5-1S Break-Even and Target Profft Analysis; Margin of Safety; CM Ratio LOS-1, LOS-3, LOS-5, LOS-6, LOS-7 Menlo Company distributes a single product. The company's sales and expenses for last month follow: Total Per Unit $450,000 180,000 $30 12 Sales Varlable expenses. 270,000 $18 Contribution margin Fixed expenses 216,000 Net operating Income. $ 54,000 Required What is the monthly break-even point in unit sales and in dollar sales? 2. Without resorting to computations, what is the total contribution margin at the break-even point 3. How many units would have to be sold each month to attain a target profit of S90.000? Verify your answer by preparing a contribution format income statement at the target sales level. 4. Refer to the original data. Compule the company's margin of safety in both dollar and percent- age terms. 5. What is the company's CM ratio? If sales increase by $50,000per month and there is no change in fixed expenses, by how much would you expct monthly net…
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Exercise 19-15 (Algo) Absorption costing and overproduction LO C1 A manufacturer reports direct materials of $6 per unit, direct labor of $3 per unit, and variable overhead of $5 per unit. Fixed overhead Is $156,000 per year, and the company estimates sales of 15,600 units at a sales price of $26 per unit for the year. The company has no beginning finished goods inventory. 1. If the company uses absorption costing, compute gross profit assuming (a) 15,600 units are produced and 15,600 units are sold and (b) 19,500 units are produced and 15,600 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 19,500 units instead of producing 15,600? Assume the company sells 15,600 units. Hint: Calculations are not required. Complete this question by entering your answers in the tabs below. Required 1 Required 2 If the company uses absorption costing, compute gross profit assuming (a) 15,600 units are produced and 15,600 units are…
Question 23 Wrap-It Company, a manufacturer of wrapping paper, began operations on June 1 of the current year. During this time, the company produced 370,000 units and sold 310,000 units at a sales price of $50 per unit. Cost information for this period is shown in the following table: Production costs Direct materials Direct labor $2.00 per unit $.80 per unit Variable overhead $814,000 in total $481,000 in total Fixed overhead Nonproduction costs Variable selling and administrative $78,000 in total Fixed selling and administrative $210,000 in total a. Prepare Wrap-It's December 31 income statement for the current year under absorption costing. b. Prepare Wrap-It's December 31 income statement for the current year under variable costing. Edit Format Table F2 F4 F5 F6 F7 F8 F9 2 -0- @ 2 W S F3 0+ #M 3 חו E C 4 R % ы бо F T < 6 G Y 87 & H
PROBLEM SET B Problem 21-1B Cost estimation using high-low method P1 Sun Co.'s monthly data for the past year follow. Management wants to use these data to predict future variable and fixed costs. Units Sold 1.... 2.... 195.000 125,000 3.... 105,000 4.... 155,000 5.... 95,000 6.... 215,000 Month Total Cost $ 97,000 87,000 73,000 89,000 81,000 110,000 Month 7 ... 8... 9... 10 ... 11 ... 12 ... Units Sold 145,000 185,000 135,000 85,000 175,000 115,000 Total Cost $ 93,000 105,000 85,000 58,000 95,000 79,000 Required 1. Estimate both the variable costs per unit and the total monthly fixed costs using the high-low method. 2. Use the answers for variable and fixed costs from part 1 to predict future total costs when sales volume is (a) 100,000 units and (b) 170,000 units. Analysis Component page 799 3. Use these data to prepare a scatter diagram. Draw an estimated line of cost behavior and determine whether the cost appears to be variable, fixed, or mixed.
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15 15 points 2010-10 Murphy Inc., which produces a single product, has provided the following data for its most recent month of operation Number of units produced Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expenses The company had no beginning or ending inventories Required: a. Compute the unit product cost under absorption costing b. Compute the unit product cost under variable costing. a Absorption costing b. Variable costing Unit Product Cost $ $ $ S 12,600 115 78 8 17 $718,200 $289,800
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Exercises 4 Event Company produces a single product with the following characteristics: price per unit, $30.00; variable material cost per unit, $9.20; variable labor cost per unit, $4.40; variable overhead cost per unit, $2.20; and fixed overhead cost per unit, $3.00. Event Company's manufacturing fixed costs are $5 million, and selling, general, and administration fixed costs are $1.5 million. What dollar sales are required for Event Company to earn a target profit of $600,000? Exercises 5 The following information pertains to Torasic Company's budgeted income statement for the month of June: Sales (1,500 units at $300) $450,000 Variable cost 200,000 250,000 280,000 $(30,000) Contribution margin Fixed cost Net loss Required a) Determine the company's breakeven point in both units and dollars. b) The sales manager believes that a $25,000 increase in the monthly advertising expenses will result in a considerable increase in sales. How much of an increase in sales must result from…
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