Summer Fun Inc., produces and sells many recreational products. The company has just opened a new plant to produce Kerosene Lanterns that will be marketed throughout the United States. Thfollowing cost and revenue data relate to February, the first month of the plant's operation:Direct MaterialDirect LaborVariable MOHVariable Selling & AdminFixed MOHFixed Selling & Admin$8 Units Produced$5 Units Sold$2$3$60,000$80,00012,00010,000Determine the per unit cost under both variable costing and absorption costing and prepare the income statement for each costing methodPrice per unit is $33

ABSORPTION COSTINGAbsorption Costing is a Cost Management Accounting method in which all costs…

Answered: Summer Fun Inc., produces and sells…

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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High Country, Incorporated, produces and sells many recreational products. The company just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) Required: 1. Assume the company uses absorption costing. a. Calculate the camp cot's unit product cost. b. Prepare an income statement for May. 2. Assume the company uses variable costing. a. Calculate the camp cot's unit product cost. b. Prepare a contribution format income statement for May. 0 46,000 41,000 $83 $4 $ 565,000 $ 16 $ 8 $1 $ 782,000 Complete this question by entering your answers in…
High Country, Incorporated, produces and sells many recreational products. The company has just opened a new plant to produce a folding camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: Beginning inventory 0 Units produced 43, 000 Units sold 38,000 Selling price per unit $ 80 Selling and administrative expenses: Variable per unit $ 3 Fixed (per month) $ 564,000 Manufacturing costs: Direct materials cost per unit $ 15 Direct labor cost per unit $ 7 Variable manufacturing overhead cost per unit $ 3 Fixed manufacturing overhead cost (per month) $ 817,000 Management is anxious to assess the profitability of the new camp cot during the month of May. Required: 1. Assume that the company uses absorption costing. a. Calculate the unit product cost. b. Prepare an income statement for May. 2. Assume that the company uses variable costing. a. Calculate the unit product cost. b. Prepare a…
Required information [The following information applies to the questions displayed below.] Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 6,850 rackets and sold 5,330. Each racket was sold at a price of $90. Fixed overhead costs are $89,050 per year, and fixed selling and administrative costs are $67,000 per year. The company also reports the following per unit variable costs for the year. Direct materials Direct labor Variable overhead Variable selling and administrative expenses Prepare an income statement under variable costing. ACES INCORPORATED Income Statement (Variable Costing) Sales Less: Variable expenses Variable cost of goods sold Vanable selling and administrative expenses Contribution margin Fixed overhead Fixed selling and administrative expenses 333 X x X > $ 89,050✔ 67,000 $479,700 335,790 $12 8 5 2 156,050 Income $ 179,740 "Red text indicates no response was expected in a cell or a formula-based calculation is…
Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 7,450 rackets and sold 5,630. Each racket was sold at a price of $90. Fixed overhead costs are $96,850 per year, and fixed selling and administrative costs are $68,200 per year. The company also reports the following per unit variable costs for the year. Direct materials $ 12 Direct labor 8 Variable overhead 5 Variable selling and administrative expenses 2 Prepare an income statement under variable costing.
Econ Company produces widgets. Each widget sells for $120, and the company sells approximately 50,000 widgets each year. Unit cost data for the year follows: Direct Material, $38 Direct Labor, $20 Other Cost: Variable Fixed Manufacturing $12 $8 Distribution 8 6 a. $70 b. $45 c. $75 d. $89
Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 7,450 rackets and sold 5,630. Each racket was sold at a price of $90. Fixed overhead costs are $96,850 per year, and fixed selling and administrative costs are $68,200 per year. The company also reports the following per unit variable costs for the year. Direct materials $ 12 Direct labor 8 Variable overhead 5 Variable selling and administrative expenses 2
Required information [The following information applies to the questions displayed below.] Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0 to 1,600 units, and monthly production costs for the production of 1,300 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($110 fixed) Supervisor's salary Maintenance ($270 fixed) Depreciation Total Cost $ 2,500 8,100 650 3,000 510 750 Suppose it sells each birdbath for $24. Required: 1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. 2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,500 units.
Edgerron Company is able to produce two products, G and B, with the same machine in its factory. The following information is available. Product G Product B Selling price per unit $ 200 $ 230 Variable costs per unit 85 138 Contribution margin per unit $ 115 $ 92 Machine hours to produce 1 unit 0.4 hours 1.0 hours Maximum unit sales per month 650 units 250 units The company presently operates the machine for a single eight-hour shift for 22 working days each month. Management is thinking about operating the machine for two shifts, which will increase its productivity by another eight hours per day for 22 days per month. This change would require $11,500 additional fixed costs per month. (Round hours per unit answers to 1 decimal place. Enter operating losses, if any, as negative values.)
The following information pertains to the first year of operation for Crystal Cold Coolers Inc.: Number of units produced Number of units sold Unit sales price Direct materials per unit Direct labor per unit Variable manufacturing overhead per unit Fixed manufacturing overhead per unit ($224,000/2,800 units) Total variable selling expenses ($11 per unit sold) Total fixed general and administrative expenses Complete this question by entering your answers in the tabs below. Required: Prepare Crystal Cold's full absorption costing income statement and variable costing income statement for the year. Full Absorption Costing 2,800 2,400 340 60 45 13 80 Variable Costing $ 26,400 $ 60,000
Diego Company manufactures one product that is sold for $72 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 55,000 units and sold 50,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Profit will Fixed manufacturing overhead Fixed selling and administrative expense $ 23 $ 14 $3 $5 The company sold 37,000 units in the East region and 13,000 units in the West region. It determined that $290,000 of its fixed selling and administrative expense is traceable to the West region, $240,000 is traceable to the East region, and the remaining $77,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product. $ 770,000 $ 607,000 15. Assume the…
Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 16,000units at a price of $320 each. Product costs include: Direct materials $68Direct labor $40Variable overhead $12Total fixed factory overhead $500,000 Variable selling expense is a commission of 5 percent of price; fixed selling and administrativeexpenses total $116,400.Required:1. Calculate the sales commission per unit sold. Calculate the contribution margin per unit.2. How many units must Jay-Zee Company sell to break even? Prepare an income statementfor the calculated number of units.3. Calculate the number of units Jay-Zee Company must sell to achieve target operatingincome (profit) of $333,408.4. What if the Jay-Zee Company wanted to achieve a target operating income of $322,000?Would the number of units needed increase or decrease compared to your answer inRequirement 3? Compute the number of units needed for the new target operating income.
Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban Selling price per unit Variable expenses per unit Traceable fixed expenses per year $ $ $ 133,000 Greengrow $ $ $ 44,000 8.00 34.00 2.40 13.00 Common fixed expenses in the company total $95,000 annually. Last year the company produced and sold 37,000 units of Weedban and 16,000 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines. Product Line Total Company Weedban Greengrow

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