The following information pertains to Lextel, Inc., for 2008: Beginning inventory in units Units produced Units sold Ending inventory in units Variable costs per unit: Direct materials 25,000 23,000 2,000 $ 8.00 Direct labor 3.00 Variable overhead Variable selling expenses Fixed costs per year: 1.80 4.00 Fixed overhead $107,500 Fixed selling and administrative 26,800 There are no work-in-process inventories. Normal activity is 25,000 units. Expected and actual overhead costs are the same. Required 1. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income. 2. Assume the selling price per unit is $26. Prepare an income statement (a) using variable costing and (b) using absorption costing.
The following information pertains to Lextel, Inc., for 2008: Beginning inventory in units Units produced Units sold Ending inventory in units Variable costs per unit: Direct materials 25,000 23,000 2,000 $ 8.00 Direct labor 3.00 Variable overhead Variable selling expenses Fixed costs per year: 1.80 4.00 Fixed overhead $107,500 Fixed selling and administrative 26,800 There are no work-in-process inventories. Normal activity is 25,000 units. Expected and actual overhead costs are the same. Required 1. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income. 2. Assume the selling price per unit is $26. Prepare an income statement (a) using variable costing and (b) using absorption costing.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
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Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 28P: The following information pertains to Vladamir, Inc., for last year: There are no work-in-process...
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Income Statements; Variable and Absorption Costing
![The following information pertains to Lextel, Inc., for 2008:
Beginning inventory in units
Units produced
25,000
Units sold
23,000
Ending inventory in units
Variable costs per unit:
2,000
Direct materials
8.00
Direct labor
Variable overhead
Variable selling expenses
Fixed costs per year:
Fixed overhead
3.00
1.80
4.00
$107,500
Fixed selling and administrative
26,800
There are no work-in-process inventories. Normal activity is 25,000 units. Expected
and actual overhead costs are the same.
Required
1. Without preparing an income statement, indicate what the difference will be
between variable-costing income and absorption-costing income.
2. Assume the selling price per unit is $26. Prepare an income statement (a) using
variable costing and (b) using absorption costing.
%24](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd8641fab-1994-4e09-a69f-cc0dc5fa3455%2Fe45f0cfc-4b5d-4bbe-a624-22c12dafc63b%2Fyypbhao_processed.png&w=3840&q=75)
Transcribed Image Text:The following information pertains to Lextel, Inc., for 2008:
Beginning inventory in units
Units produced
25,000
Units sold
23,000
Ending inventory in units
Variable costs per unit:
2,000
Direct materials
8.00
Direct labor
Variable overhead
Variable selling expenses
Fixed costs per year:
Fixed overhead
3.00
1.80
4.00
$107,500
Fixed selling and administrative
26,800
There are no work-in-process inventories. Normal activity is 25,000 units. Expected
and actual overhead costs are the same.
Required
1. Without preparing an income statement, indicate what the difference will be
between variable-costing income and absorption-costing income.
2. Assume the selling price per unit is $26. Prepare an income statement (a) using
variable costing and (b) using absorption costing.
%24
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