Required:1. Prepare an income statement using absorption costing based on production of 21,750 tons and sales of 17,400 tons. Can thecompany report a positive income by increasing production to 21,750 tons and storing the 4,350 tons of excess production ininventory?2. By how much does income increase by when producing 21,750 tons and storing 4,350 tons in inventory compared to onlyproducing 17,400 tons?Complete this question by entering your answers in the tabs below.Required 1 Required 2Prepare an income statement using absorption costing based on production of 21,750 tons and sales of 17,400 tons. Can thecompany report a positive income by increasing production to 21,750 tons and storing the 4,350 tons of excess production inInventory? (Round your answers to the nearest whole dollar.)BLAZER CHEMICALIncome Statement (Absorption Costing)Did the company report a positive income?$00Required 2 > Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells21,750 tons of its granular. Because of this year's mild winter, projected demand for its product is only 17,400 tons. Based on projectedproduction and sales of 17,400 tons, the company estimates the following income using absorption costing.Sales (17,400 tons at $112 per ton)Cost of goods sold (17,400 tons at $60 per ton)Gross profitSelling and administrative expensesIncomeIts product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensiveequipment.Direct materialsDirect labor$ 1,360,0001,044,000316,000316,000$0Variable overhead.Fixed overhead ($696,000/17,400 tons)$ 13 per ton$ 4 per ton$ 3 per ton$40 per tonSelling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling andadministrative expenses of $211,600 per year. The company's president will not earn a bonus unless a positive income is reported. Thecontroller mentions that because the company has large storage capacity, it can report a positive income by setting production at theusual 21,750 ton level even though it expects to sell only 17,400 tons. The president is surprised that the company can report incomeby producing more without increasing sales.Required:1. Prepare an income statement using absorption costing based on production of 21,750 tons and sales of 17,400 tons. Can thecompany report a positive income by increasing production to 21,750 tons and storing the 4,350 tons of excess production ininventory?2. By how much does income increase by when producing 21,750 tons and storing 4,350 tons in inventory compared to onlyproducing 17,400 tons?

Absorption costing income statement is the traditional method of representation of income statement.…

Answered: Required: 1. Prepare an income…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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The following information is available for Bramble Corp.: Sales Cost of goods sold $520000 0 0 0 0 300000 Total fixed expenses A CVP income statement would report contribution gross profit of $220000. contribution gross profit of $260000. Total variable expenses margin of $260000. margin of $370000. $150000 260000
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1. Compute the unit product cost under absorption costing. 2. Compute the net income under absorption costing. 3. What will be the value of the ending inventory if the company is using absorption costing?
Baxtell Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 27 7 4 9 370,800 183,200 During the year, the company produced 30,900 units and sold 22,900 units. The selling price of the company's product is $73 per unit. Required: 1. Assume that the company uses absorption costing. a. Compute the unit product cost. Unit product cost b. Prepare an income statement for the year. (Do not leave any empty spaces; Input a O wherever it is required.) Absorption Costing Income Statement Cost of goods sold:
Contribution Margin, Break-Even Sales, Cost-Volume-Profit Chart, Margin of Safety, and Operating Leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Estimated Variable Cost Fixed Cost (per unit sold) Production costs: Direct materials $50.00 Direct labor 30.00 Factory overhead $350,000 6.00 Selling expenses: Sales salaries and commissions 340,000 4.00 Advertising 116,000 Travel 4,000 Miscellaneous selling expense 2,300 1.00 Administrative expenses: Office and officers' salaries 325,000 Supplies 6,000 4.00 Miscellaneous administrative expense 8,700 1.00 Total $1,152,000 $96.00 It is expected that 12,000 units will be sold at a price…
Tennair Corporation manufactures cooling system components. The company has gathered the following information about two of its customers: Evans Equipment and Rogers Refrigeration. Evans Equipment Sales revenue Rogers Refrigeration $ 160,000 61,000 Cost of goods sold General selling costs $ 229,000 102,000 37,000 23,800 28,500 General administrative costs 17,850 Cost-driver data used by the firm and traceable to Evans and Rogers are: Customer Activity Sales activity Order taking Special handling Special shipping Customer Activity Sales activity Order taking Special handling Special shipping Cost Driver Sales visits Sales orders Units handled Shipments Evans Equipment 12 visits 31 orders 460 units. 33 shipments Pool Rate $ 970 278 44 460 Rogers Refrigeration 9 visits 36 orders 410 units 44 shipments Required: A. Perform a customer profitability analysis for Tennair. Compute the gross margin and operating income on transactions related to Evans Equipment and Rogers Refrigeration.
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V. Prepare a CONTRIBUTION MARGIN (also known as variable costing) income statement given a traditional (also known as absorption costing) income statement Bruno Industries manufactures and sells a single product. The controller has prepared the following income statement for the most recent year: B C D 1 2 3 Bruno Industries Traditional Income Statement (Absorption Costing) For the Year Ended December 31 4 5 Sales revenue 6 Less: Cost of goods sold 7 Gross profit 8 Less: Operating expenses 9 Operating income $ 406,000 329,000 $ 77,000 73,000 $ 4,000 10 The company produced 8,000 units and sold 7,000 units during the year ending December 31. Fixed manufacturing overhead (MOH) for the year was $152,000, while fixed operating expenses were $62,000. The company had no beginning inventory. Requirements 1. Will the company's operating income under variable costing be higher, lower, or the same as its operating income under absorption costing? Why? 2. Prepare a variable costing income…
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You have the following information for Kingbird Diamonds. Kingbird Diamonds uses the periodic method of accounting for its inventory transactions. Kingbird only carries one brand and size of diamonds-all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost. March 1 March 3 March 5 March 10 March 25 Beginning inventory 180 diamonds at a cost of €368 per diamond. Purchased 240 diamonds at a cost of €420 each. Sold 224 diamonds for €720 each. Purchased 420 diamonds at a cost of €464 each. Sold 480 diamonds for €780 each.
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