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Rundle Company incurred manufacturing overhead cost for the year as follows. $ 39.50/unit 26.60/unit $ Direct materials Direct labor Manufacturing overhead Variable Fixed ($18.80/unit for 1,408 units) Variable selling and administrative expenses Fixed selling and administrative expenses $ 10.30/unit $ 26,320 $ 6,390 $ 15,100 The company produced 1,400 units and sold 900 of them at $180.10 per unit. Assume that the production manager is paid a 3 percent. bonus based on the company's net income. Required a. Prepare an income statement using absorption costing. b. Prepare an income statement using variable costing. c. Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting?

Rundle Company incurred manufacturing overhead cost for the year as follows. $ 39.50/unit 26.60/unit $ Direct materials Direct labor Manufacturing overhead Variable Fixed ($18.80/unit for 1,408 units) Variable selling and administrative expenses Fixed selling and administrative expenses $ 10.30/unit $ 26,320 $ 6,390 $ 15,100 The company produced 1,400 units and sold 900 of them at $180.10 per unit. Assume that the production manager is paid a 3 percent. bonus based on the company's net income. Required a. Prepare an income statement using absorption costing. b. Prepare an income statement using variable costing. c. Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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es Rundle Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 39.50/unit $ 26.60/unit Direct labor Manufacturing overhead Variable Fixed ($18.80/unit for 1,400 units) Variable selling and administrative expenses Fixed selling and administrative expenses The company produced 1,400 units and sold 900 of them at $180.10 per unit. Assume that the production manager is paid a 3 percent bonus based on the company's net income. Required a. Prepare an income statement using absorption costing. b. Prepare an income statement using variable costing. c. Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting? Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare an income statement using absorption costing. RUNDLE COMPANY Income Statement (Absorption Costing) Revenues Cost of goods Sold Direct materials Direct labor Manufacturing overhead Manufacturing equipment $ 10.30/unit $ 26,320 $ 6,390 $ 15,100 Gross margin Selling and administrative expenses $ 55,300 37,240 S 162,090 $ U 92.540 69,550
Transcribed Image Text:es Rundle Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 39.50/unit $ 26.60/unit Direct labor Manufacturing overhead Variable Fixed ($18.80/unit for 1,400 units) Variable selling and administrative expenses Fixed selling and administrative expenses The company produced 1,400 units and sold 900 of them at $180.10 per unit. Assume that the production manager is paid a 3 percent bonus based on the company's net income. Required a. Prepare an income statement using absorption costing. b. Prepare an income statement using variable costing. c. Determine the manager's bonus using each approach. Which approach would you recommend for internal reporting? Complete this question by entering your answers in the tabs below. Required A Required B Required C Prepare an income statement using absorption costing. RUNDLE COMPANY Income Statement (Absorption Costing) Revenues Cost of goods Sold Direct materials Direct labor Manufacturing overhead Manufacturing equipment $ 10.30/unit $ 26,320 $ 6,390 $ 15,100 Gross margin Selling and administrative expenses $ 55,300 37,240 S 162,090 $ U 92.540 69,550
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