Sourk Enterprises released the figures given below from its records for the year land 2: Year 2 2,40,000 2,40,000 2,40,000 4,00,000 Year 1 Sales units Production units Selling price per unit ($) Variable manufacturing cost per unit ($) Annual fixed manufacturing cost ($) Variable marketing and administrative costs per unit ($) Fixed marketing and administrative costs ($) 20 20 12 12 12,00,000 12,00,000| 1.25 1.25 4,20,000 4,20,000 (i) Prepare income statements for both years, using full-absorption costing. (i) prepare income statement for both vears, using variable costing,

Sourk Enterprises released the figures given below from its records for the year land 2: Year 2 2,40,000 2,40,000 2,40,000 4,00,000 Year 1 Sales units Production units Selling price per unit ($) Variable manufacturing cost per unit ($) Annual fixed manufacturing cost ($) Variable marketing and administrative costs per unit ($) Fixed marketing and administrative costs ($) 20 20 12 12 12,00,000 12,00,000| 1.25 1.25 4,20,000 4,20,000 (i) Prepare income statements for both years, using full-absorption costing. (i) prepare income statement for both vears, using variable costing,

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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Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($54 per unit) Cost of goods sold ($40 per unit) Year 2 Year 1 $ 1,512,000 1,120,000 $ 3,132,000 2,320,000 Gross profit Selling and administrative expenses Income 392,000 293,000 812,000 323,000 $ 99,000 $ 489,000 Additional Information a. Sales and production data for these first two years follow. Units Units produced Units sold Year 1 43,000 28,000 Year 2 43,000 58,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $40 per unit product cost using absorption costing consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($387,000/43,000 units) Total product cost per unit $ 13 13 5 9 $ 40 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative…
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