Sterling Corporation reports the following information:Units soldUnits produced20092010201120,00020,00020,00020,00024,00016,000Fixed production costs$12,00,000 $12,00,000 $12,00,000Variable production costs per unit$ 200$ 200$ 200Selling price per unit$ 400$ 400$ 400Fixed selling and administrative$ 4,00,000$ 4,00,000 $ 4,00,000Calculate the profit each year using variable costing. Explain why profitdoes not fluctuate from year to year using variable costing.

Step 1:To calculate the net profit for Sterling Corporation under variable costing first all…

Answered: Sterling Corporation reports the…

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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Harris Company manufactures and sells a single product. A partially completed schedule of the company's total costs and costs per unit over the relevant range of 52,000 to 92,000 units is given below: Required: 1. Complete the schedule of the company's total costs and costs per unit as given in the relevant tab below. 2. Assume that the company produces and sells 82,000 units during the year at a selling price of $9.56 per unit. Prepåre a contribution format income statement for the year.
Check myt 750 900 Number of Canoes Produced and Sold Total costs Variable costs 550 $115,500 $157,500 $189,000 198,000 $387,000 198,000 198,000 $313,500 $355,500 Fixed costs Total costs Cost per unit Variable cost per unit Fixed cost per unit $ 210.00 360.00 $ 210.00 264.00 $ 210.00 220.00 $ 570.00 $ 474.00 $ 430.00 Total cost per unit Riverside sells its canoes for $650 each. Next year Riverside expects to sell 1,000 canoes. Required: Complete the Riverside's contribution margin income statement for each independent scenario. Assuming each scenario is a variation of Riverside's original data. (Round your unit contribution margin and contribution margin ratio to 2 decimal places (i.e. 1234 should be entered as 12.34%) and all other answers to the nearest dollar amount.) Scenario 2 Increase Scenario 3 Scenario 1 Raises Sales Price to $750 per Canoe Sales Price and Variable Cost per Unit by 10 Percent Decrease Fixed Cost by 20 Percent Unit Contribution Margin Contribution Margin Ratio…
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Average Cost per Unit $ 7.00 $ 4.00 $ 1.50 $ 5.00 $ 3.50 $ 2.50 $ 1.00 $ 0.50 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 20,000 units? 2. For financial accounting purposes, what is the total amount of perlod costs incurred to sell 20,000 units? 3. For financial accounting purposes, what is the total amount of product costs incurred to make 22,000 units? 4. For financial accounting purposes, what is the total amount of period costs incurred to sell 18,000 units? 1. Total amount of product costs 2. Total amount of period costs incurred 3. Total amount of product costs 4. Total amount of period costs
Assume the following information for a company that produced and sold 10,000 units during its first year of operations: Per Unit Per Year $ 200 $ 71 $ 50 $ 9 $ 8 Selling price Direct materials Direct labor Variable manufacturing overhead Sales commission Fixed manufacturing overhead $ 300,000 Using absorption costing, what is the company's net operating income? Multiple Choice O $320,000 $620,000 $400,000 $300,000
Sales volume (units) Revenue Variable costs Direct materials Direct labor Contribution margin Fixed costs Profit $30,000 $2.00 $45,000 Use direct labor dollars as the cost driver. Compute allocated fixed costs for Product X: O $20,000 Product X 400 $60,000 $50,000 $25,000 $15,000 $20,000 Product Y 600 $60,000 $15,000 $10,000 $35,000 Total 1,000 $120,000 $40,000 $25,000 $55,000 $50,000 $5,000
Cost Planning for Product Life Cycle... 229 RM800 Revenue Costs Research and development Prototypes Marketing Distribution Year 1 P 900,000 1,150,000 550,000 124,000 170,000 85,000 -0- P(1,179,000) Year 2 Year 3 P1,800,000 P2,000,000 -0- -0- 30,000 200,000 300,000 600,000 20,000 P 650,000 10,000 260,000 410,000 700,000 10,000 P 610,000 Manufacturing Customer service Income Required: 1. How would a product life-cycle income statement differ from this calendar- year income statement? 2. Prepare a three-year life-cycle income statement for both products. Which product appears to be more profitable? 3. Prepare a schedule showing each cost category as a percentage of total annual costs. Pay particular attention to the research and development and customer service categories. What do you think this indicates about the profitability of each product over the three-year life cycle?
Assume the following information for a company that produced and sold 10,000 units during its first year of operations: Per Unit $ 200 $77 $ 50 $10 Selling price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Using absorption costing, what is the company's unit product cost? Multiple Choice O $157 O $167 $127 $137 Per Year $ 300,000
Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Rates Activity Cost Pool Labor-related Machine-related Machine setups Production orders Shipments General factory ME $ 5.00 per direct labor-hour $ 4.00 per machine-hour $ 60.00 per setup $ 100.00 per order $ 120.00 per shipment $ 4.00 per direct labor-hour Cost and activity data have been supplied for the following products: 378 852 Direct materials cost per unit Direct labor cost per unit $ 3.50 $ 20.00 $ 3.75 Number of units produced per year $9.00 400 2,000 Direct labor-hours Machine-hours Machine setups Production orders Chinmante Total Expected Activity 378 852 1,200 40 2,800 20 4 4 A 7 7 4
What is the joint cost allocated to product Tab if the company employs relative sales value method? P300,000P200,000P192,000P288,000
Selling price $215 $230 Direct materials (pounds) 23,000 25,000 Direct materials costs per pound $30 $32 Manufacturing capacity for CM5 (units) 11,000 11,000 Conversion costs (fixed costs) $770,000 $803,000 Conversion costs per unit of capacity $70 $73 Manufacturing conversion costs in each year depend on production capacity defined in terms of CM5 units that can be produced. Required: What is the net effect on operating income as a result of the growth component? $51,000 $116,800 $112,000 $166,000
A1

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