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Sunrise Pools and Spas manufactures fibreglass forms for in-ground pools and swim spas for all-season use. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the data for their swim spa business in years 1, 2, and 3 shown below. The company's fixed manufacturing overhead per unit was constant at $2,900 for all three years: Year 2 Inventories: Beginning (units) Ending (units) Variable costing operating income Year 1 170 200 $292,800 200 170 $269,600 Variable costing operating income. Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income Year 3 Absorption Costing Operating Incomes Year 1 $ 292,800 87,000 580,000 $ 959,800 Required: 1. Determine each year's absorption costing operating income. Present your answer in the form of a reconciliation report. $252,200 Answer is complete but not entirely correct. 170 240 Year 2 $ 269,600 ( 00 580,000 $ (310,400) Year 3 $ 252,200 203,000 493,000 $ 455,200

Sunrise Pools and Spas manufactures fibreglass forms for in-ground pools and swim spas for all-season use. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the data for their swim spa business in years 1, 2, and 3 shown below. The company's fixed manufacturing overhead per unit was constant at $2,900 for all three years: Year 2 Inventories: Beginning (units) Ending (units) Variable costing operating income Year 1 170 200 $292,800 200 170 $269,600 Variable costing operating income. Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income Year 3 Absorption Costing Operating Incomes Year 1 $ 292,800 87,000 580,000 $ 959,800 Required: 1. Determine each year's absorption costing operating income. Present your answer in the form of a reconciliation report. $252,200 Answer is complete but not entirely correct. 170 240 Year 2 $ 269,600 ( 00 580,000 $ (310,400) Year 3 $ 252,200 203,000 493,000 $ 455,200

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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2-a. In year 4, the company's variable costing operating income was $244,200 and its absorption costing operating income was $211,200. Did Inventories increase or decrease during year 4? Increase Decrease 2-b. How much fixed manufacturing overhead cost was deferred or released from inventory during year 4? Fixed manufacturing overhead coat inventory during year 4
Transcribed Image Text:2-a. In year 4, the company's variable costing operating income was $244,200 and its absorption costing operating income was $211,200. Did Inventories increase or decrease during year 4? Increase Decrease 2-b. How much fixed manufacturing overhead cost was deferred or released from inventory during year 4? Fixed manufacturing overhead coat inventory during year 4
Sunrise Pools and Spas manufactures fibreglass forms for in-ground pools and swim spas for all-season use. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the data for their swim spa business in years 1, 2, and 3 shown below. The company's fixed manufacturing overhead per unit was constant at $2,900 for all three years: Year 1 Year 2 Year 3 170 240 $252,200 Inventories: Beginning (units) Ending (units) Variable costing operating income 170 200 $292,800 200 170 $269,600 Required: 1. Determine each year's absorption costing operating income. Present your answer in the form of a reconciliation report. Answer is complete but not entirely correct. Absorption Costing Operating Incomes Year 1 $ 292,800 87,000 Variable costing operating income Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income 580,000 $ 959,800 Year 2 $ 269,600 0 Year 3 $ 252,200 203,000 580,000 493,000 $ (310,400) $ 455,200
Transcribed Image Text:Sunrise Pools and Spas manufactures fibreglass forms for in-ground pools and swim spas for all-season use. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the data for their swim spa business in years 1, 2, and 3 shown below. The company's fixed manufacturing overhead per unit was constant at $2,900 for all three years: Year 1 Year 2 Year 3 170 240 $252,200 Inventories: Beginning (units) Ending (units) Variable costing operating income 170 200 $292,800 200 170 $269,600 Required: 1. Determine each year's absorption costing operating income. Present your answer in the form of a reconciliation report. Answer is complete but not entirely correct. Absorption Costing Operating Incomes Year 1 $ 292,800 87,000 Variable costing operating income Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income 580,000 $ 959,800 Year 2 $ 269,600 0 Year 3 $ 252,200 203,000 580,000 493,000 $ (310,400) $ 455,200
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