**Accounting Records of Willow Creek Co. - Educational Resource**The following data are available from the accounting records of Willow Creek Co. for the month ended May 31. During the accounting period, 17,000 units were manufactured and sold at a price of $60 per unit. There were no beginning inventories, and all units were completed (no work in process).### Cost Breakdown#### Manufacturing Costs:| Cost Type | Total Cost | Number of Units | Unit Cost ||------------|------------|-----------------|-----------||**Variable**| $442,000 | 17,000 | $26 ||**Fixed** | $170,000 | 17,000 | $10 ||**Total** | $612,000 | - | $36 |#### Selling and Administrative Expenses:| Cost Type | Total Cost ||------------|------------||**Variable ($2 per unit sold)** | $34,000 ||**Fixed** | $32,000 ||**Total** | $66,000 |### Income Statement Preparation:**Willow Creek Co.** **Variable Costing Income Statement** **For the Month Ended May 31**| Description | Amount | |---------------------------------|------------|| Sales (17,000 units at $60) | $1,020,000 || Less: Variable Costs | - || - Manufacturing Costs ($442,000)| $442,000 || - Selling & Administration ($34,000)| $34,000 || Total Variable Costs | $476,000 || Contribution Margin | $544,000 || Less: Fixed Costs | - || - Manufacturing Costs ($170,000)| $170,000 || - Selling & Administration ($32,000)| $32,000 || Total Fixed Costs | $202,000 || Net Operating Income | $342,000 | ### Educational Resource on Income Statements#### a. Variable Costing Income StatementTo prepare a Variable Costing Income Statement, we follow these steps:1. **Sales**: Record the total sales revenue.2. **Variable Costs**: Record and subtract the total variable costs.3. **Manufacturing Margin**: The difference between sales and variable costs.4. **Fixed Costs**: Subtract fixed costs from the manufacturing margin to get the income from operations.#### b. Absorption Costing Income StatementTo prepare an Absorption Costing Income Statement, follow these steps:1. **Willow Creek Co.**2. **Absorption Costing Income Statement**: 3. **For the Month Ended May 31**: This heading specifies the period covered by the statement.4. **Sales**: Record the total sales revenue.5. **Less: Cost of Goods Sold**: Record the cost of goods sold and subtract it from sales.6. **Gross Profit**: The difference between sales and cost of goods sold.7. **Less: Selling and Administrative Expenses**: Subtract selling and administrative expenses from gross profit.8. **Income from Operations**: The final income from operations after subtracting selling and administrative expenses.### Example: Filling in ValuesLet us assume we have the following hypothetical data to complete the income statements:**Variable Costing Income Statement**1. Sales: $ \_\_\_\_\_\_\_\_ $2. Variable Costs: $ \_\_\_\_\_\_\_\_ $3. Manufacturing Margin: $ \_\_\_\_\_\_\_\_ $4. Fixed Costs: - Fixed Manufacturing Costs: $ \_\_\_\_\_\_\_\_ $ - Fixed Selling and Administrative Costs: $ \_\_\_\_\_\_\_\_ $5. Income from Operations: $ \_\_\_\_\_\_\_\_ $**Absorption Costing Income Statement (Willow Creek Co.)**1. Sales: $ \_\_\_\_\_\_\_\_ $2. Less: Cost of Goods Sold: $ \_\_\_\_\_\_\_\_ $3. Gross Profit: $ \_\_\_\_\_\_\_\_ $4. Less: Selling and Administrative Expenses: $ \_\_\_\_\_\_\_\_ $5. Income from Operations: \( \_\_\_\_\_\_\

Variable Costing -Under Variable Costing Method That Only Includes Variable Overhead Incurred In…

The following data are available from the accounting records of Willow Creek Co. for the month ended May 31. During the accounting period, 17,000 units were manufacture and sold at a price of $60 per unit. There were no beginning inventories, and all units were completed (no work in process). Cost Total Cost Number of Units Unit Cost

The following data are available from the accounting records of Willow Creek Co. for the month ended May 31. During the accounting period, 17,000 units were manufacture and sold at a price of $60 per unit. There were no beginning inventories, and all units were completed (no work in process). Cost Total Cost Number of Units Unit Cost

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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Morton Inc. has provided the following data for the month of November. The balance in the Finished Goods inventory account at the beginning of the month was $50,500 and at the end of the month was $46,500. The cost of goods manufactured for the month was $241,000. The actual manufacturing overhead cost incurred was $89,000 and the manufacturing overhead cost allocated to Work in Process was $85,000. The adjusted cost of goods sold that would appear on the income statement for November is: $241,000 $245,000 $237,000 $249,000
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Walton Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 39.00 /unit Direct labor $ 27.40 /unit Manufacturing overhead Variable $ 11.10 /unit Fixed ($18.80/unit for 1,900 units) $ 35,720 Variable selling and administrative expenses $ 10,360 Fixed selling and administrative expenses $ 15,500 The company produced 1,900 units and sold 1,400 of them at $182.00 per unit. Assume that the production manager is paid a 1 percent bonus based on the company’s net income. Required Prepare an income statement using absorption costing. Prepare an income statement using variable costing. Determine the manager’s bonus using each approach. Which approach would you recommend for internal reporting?
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Maryville Incorporated incurred the following costs during June: Raw materials used Direct labor Manufacturing overhead, actual Selling expenses Administrative expenses Interest expense $ 331,000 652,000 448,000 267,000 194,000 91,000 During the month, 53,000 units of product were manufactured and 48,000 units of product were sold. On June 1, Maryville carried no Inventories. On June 30, there were no inventories other than finished goods. Required: a. Calculate the cost of goods manufactured during June and the average cost per unit of product manufactured. b. Calculate the cost of goods sold during June. c. Calculate the difference between cost of goods manufactured and cost of goods sold. How will this amount be reported in the financial statements? d. Prepare a traditional (absorption) income statement for Maryville for the month of June. Assume that sales for the month was $2,448,000 and the company's effective income tax rate was 30%. Complete this question by entering your…