The level of inventory of a manufactured product has increased by 7,538 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period 2.00 3.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) a.$45,228 decrease b.$67,842 increase c.$67,842 decrease d.$45,228 in

The level of inventory of a manufactured product has increased by 7,538 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $6.00 Unit operating expenses of the period 2.00 3.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) a.$45,228 decrease b.$67,842 increase c.$67,842 decrease d.$45,228 in

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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Cost of Goods Manufactured, using Variable Costing and Absorption Costing On March 31, the end of the first year of operations, Barnard Inc., manufactured 3,300 units and sold 2,800 units. The following income statement was prepared, based on the variable costing concept: Sales Variable cost of goods sold: Variable cost of goods manufactured Inventory, March 31 Total variable cost of goods sold Manufacturing margin Total variable selling and administrative expenses Contribution margin Fixed costs: Barnard Inc. Variable Costing Income Statement For the Year Ended March 31, 20Y1 Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Operating income Variable costing Absorption costing $508,200 (77,000) $231,000 72,800 $896,000 (431,200) $464,800 (106,400) $358,400 (303,800) $54,600 Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations: Sales (000s) Production (000s) Production cost Factory-variable (per unit) -fixed (000s) Marketing-variable (per unit) Administrative-fixed (000s) Prior Year 1,800 units 2,000 units $ 0.60 $1,000 $ 0.40 $ 500 Current Year 2,200 units. 2,000 units $ 0.60 $ 1,000 $ 0.40 $ 500 Required: 1. Prepare an income statement for each year based on full costing. 2. Prepare an income statement for each year based on variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method.
The level of inventory of a manufactured product has increased by 7,848 units during a period. The following data are also available Variable Fixed Unit manufacturing costs of the period $11.00 $3.00 Unit operating expenses of the period 2.00 5.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) Oa. $23,544 increase Ob. $62,784 decrease Oc. $62,784 increase Od. $23,544 decrease
Cost of Goods Manufactured, using Variable Costing and Absorption Costing On December 31, the end of the first year of operations, Frankenreiter Inc., manufactured 1,800 units and sold 1,500 units. The following income statement was prepared, based on the variable costing concept: Frankenreiter Inc.Variable Costing Income StatementFor the Year Ended December 31, 20Y1 Sales $780,000 Variable cost of goods sold: Variable cost of goods manufactured $450,000 Inventory, December 31 (75,000) Total variable cost of goods sold 375,000 Manufacturing margin $405,000 Total variable selling and administrative expenses 93,000 Contribution margin $312,000 Fixed costs: Fixed manufacturing costs $205,200 Fixed selling and administrative expenses 63,000 Total fixed costs 268,200 Income from operations $43,800 Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the…
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Question Content Area Product J is one of the many products manufactured and sold by Oceanside Company. An income statement by product line for the past year indicated a net profit for Product J of $2,750. This net profit resulted from sales of $275,000, cost of goods sold of $186,500, and operating expenses of $85,750. It is estimated that 30% of the cost of goods sold represents fixed factory overhead costs and that 40% of the operating expense is fixed. If Product J is retained, the revenue, costs, and expenses are not expected to change significantly from those of the current year. Because of the large number of products manufactured, the total fixed costs and expenses are not expected to decline significantly if Product J is discontinued. Question Content Area Prepare a differential analysis report dated February 8 of the current year. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential AnalysisContinue (Alternative 1) or…
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