The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:Beginning inventoryUnits producedUnits soldSelling price per unitSelling and administrative expenses:Variable per unitFixed per year031,60029,600$ 414$ 21$ 621,600Manufacturing costs:Direct materials cost per unitDirect labor cost per unitVariable manufacturing overhead cost per unitFixed manufacturing overhead per yearAssume that direct labor is a variable cost.Required:a. Compute the unit product cost under both the absorption costing and variable costing approaches.b. Prepare an income statement for the year using absorption costing.c. Prepare an income statement for the year using variable costing.d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.$ 216$ 50$37$ 379,200

The unit product cost is the cost of producing the goods in factory. Under variable costing the unit…

Answered: ration pr Beginning inventory Units…

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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Chapter 3- CVP Cost-volume-profit (CVP) analysis requires an understanding of cost behavior: variable and fixed costs. Cost behavior differs from the GAAP-based financial reporting focus: product and period costs. The two ways to categorize costs results in TWo different income statements: Absorption costing income statement: S-C-GM-SA-NI (Key assumption: Split costs into product and period costs) Variable costing income statement: S-VE-CM-FE-NI (Key assumption: Split costs into variable and fixed) 1. 2. Absorption Costing Income Statement Variable Costing Income Statement Sales $500,000 Sales $500,000 Less: Variable expenses Less: Cost of goods sold: Variable (DM+DL+VOH) Fixed (FOH) Gross margin 100,000 Product costs 100,000 60,000 S&A costs 110,000 340,000 Contribution margin 290,000 Less: Fixed expenses Less: Selling & administrative Variable 110,000 Product costs 60,000 Fixed 140,000 S&A costs 140,000 Taxable income $90,000 Taxable income $90,000 LINK THE LINEAR COST FUNCTION TO…
show Total Period cost by using absorption costing.
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Amazin' 69 Corp. Income Statement For Month Ending May 31, 20XX Fixed Cost of Goods Sold Fixed Selling and Administrative Costs Sales Revenue Variable Cost of Goods Sold Variable Selling and Administrative Costs Operating Income Calculate the contribution margin and operating income for May Amazin' 69 Corp. Contribution Margin Income Statement For Month Ending May 31 20XX
On November 30, the end of the first month of operations, Weatherford Company prepared the following income statement, based on the absorption costing concept: Weatherford Company Absorption Costing Income Statement For the Month Ended November 30 Sales (6,100 units) Cost of goods sold: Cost of goods manufactured (7,000 units) Inventory, November 30 (1,000 units) Total cost of goods sold Gross profit $161,000 Sales Variable cost of goods sold: Variable cost of goods manufactured Inventory, November 30 (23,000) $201,300 138,000 $63,300 Selling and administrative expenses 35,910 Income from operations $27,390 Assume the fixed manufacturing costs were $38,640 and the fixed selling and administrative expenses were $17,590 Prepare an income statement according to the variable costing concept. Round all final answers to whole dollars. Weatherford Company Variable Costing Income Statement For the Month Ended November 30 201,300
Ht.9.
Part 2: Based on the data presented in the Unit VII Spreadsheet Template in Excel (Full Variable tab), complete thecalculations listed below.• Calculate the value of ending inventory under full or absorption costing.• Calculate the value of ending inventory under variable costing.Which method you think is more helpful to managers and why. Cookie Business Productions Costs: Direct material $ 0.60 Direct labor $ 1.00 Variable manufacturing overhead $ 0.40 Total variable manufacturing costs per unit $ 2.00 Fixed manufacturing overhead per year $ 139,000.00 In addition, the company has fixed selling and administrative costs: Fixed selling costs per year $ 50,000.00 Fixed administrative costs per year $ 65,000.00 Selling price per cookie $ 3.75 Number of cookies produced 2,780,000 Number of cookies sold 2,600,000 Full (absorption) costing : Full…
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Check my work During Heaton Company's first two years of operations, It reported absorption costing net operating income as follows: Sales (@ $63 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses* Year 1 $ 1, 008, 00 560, 000 448, 000 295, 000 Year 2 $ 1, 638, 00 910, 000 728, 000 325, 000 Net operating income 153, 000 403, 000 * $3 per unit variable; $247,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials $ 5 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($357, 000 + 21, 000 units) Absorption costing unit productlcost 10 3 17 $ 35 Production and cost data for the first two years of operations are: Year 2 21, 000 Year 1 Units produced Units sold 21, 000 16, 000 26, 000 Required: 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…

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