Question 4. Flopper Engines Ltd assembles and sells ship engines. In September and October 2016, the selling price per engine was £15,000. Further data for October and September are: September October Unit data Opening inventory 100 Production 250 250 Sales 150 290 Variable cost data Manufacturing cost per unit £6,800 £6,800 Fixed cost data Manufacturing costs Marketing costs £850,000 £250,000 £850,000 £250,000 REQUIRED: Calculate the operating income for September using (a) (b) (c) Variable (marginal) costing Full (absorption) costing Explain why there is a difference in profit between the two costing approaches. Why might the manager of the Mountain Climbing division prefer one method over the other when preparing his internal report to the CFO?

Question 4. Flopper Engines Ltd assembles and sells ship engines. In September and October 2016, the selling price per engine was £15,000. Further data for October and September are: September October Unit data Opening inventory 100 Production 250 250 Sales 150 290 Variable cost data Manufacturing cost per unit £6,800 £6,800 Fixed cost data Manufacturing costs Marketing costs £850,000 £250,000 £850,000 £250,000 REQUIRED: Calculate the operating income for September using (a) (b) (c) Variable (marginal) costing Full (absorption) costing Explain why there is a difference in profit between the two costing approaches. Why might the manager of the Mountain Climbing division prefer one method over the other when preparing his internal report to the CFO?

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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ceive full credit you must show your as a template. Practice Problems 1)Corp sells several products. Information on average revenue and costs is as follows: Selling price per unit $28.50 Variable costs per unit: Direct material $5.50 Direct manufacturing labor $1.15 Manufacturing overhead $0.85 Selling costs $2.50 $125,000 ulations Annual fixed costs How much is operating income if the company sells 15,000 units? 2) If the company decides to lower its selling price by 10%, the operating income is reduced by how r hour: firm (this is conceptually similar to the O/H allocation year 2015, O/H cost estimates total $840,000 for an 2015, it decided to evaluate the use of additional ined that number of design changes, setups, and llowing information was gathered during the analysis: S 0 ! Activity level 300 design changes 5,000 setups 8,000 inspections pital Systems, are expected to use the following lospital Systems 76,000 0 10 38 e O/H cost estimate for Money Managers for a deluxe model.…
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Custom Value Products makes and sells a single product in a 7-state area. Information for their product is below: $281.00 185.00 Unit Selling Price Unit Variable Cost Total Fixed Cost $3,400,000 Expected sales 12,000 units Required: Use the CVP template to calculate the company's break-even point in both units and sales dollars as well as their expected income for next year at their planned sales volume. Ignore income taxes for this calculation. If the company's variable cost of manufacturing decreases by 5% next year and they reduce their selling price by 5%, will their break-even point and expected income increase or decrease? Show calculations. Explain in your own words how adding another product to their offerings would change their CVP calculations.
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