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The manager of the manufacturing division of Bumble Bee Inc. does not understand why income went down when sales went up. Some of the information he has selected for evaluation includes: March May April 70,000 110,000 85,000 90,000 Units produced Units sold 100,000 80,000 In addition, the selling price was $28; variable production costs were $10; variable selling expenses were $4; fixed overhead costs were $1,000,000 each month; fixed selling expenses are $60,000 each month. BBI expected to produce 80,000 units each month. Beginning inventory for March was 5,000 units. REQUIRED: 1. Prepare a variable cost income statement for each month. 2. Prepare an absorption cost income statement for each month. 3. Reconcile the income statements for each of the three months.

The manager of the manufacturing division of Bumble Bee Inc. does not understand why income went down when sales went up. Some of the information he has selected for evaluation includes: March May April 70,000 110,000 85,000 90,000 Units produced Units sold 100,000 80,000 In addition, the selling price was $28; variable production costs were $10; variable selling expenses were $4; fixed overhead costs were $1,000,000 each month; fixed selling expenses are $60,000 each month. BBI expected to produce 80,000 units each month. Beginning inventory for March was 5,000 units. REQUIRED: 1. Prepare a variable cost income statement for each month. 2. Prepare an absorption cost income statement for each month. 3. Reconcile the income statements for each of the three months.

FINANCIAL ACCOUNTING
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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The manager of the manufacturing division of Bumble Bee Inc. does not understand why income went down when sales went up. Some of the information he has selected for evaluation includes: March Units produced Units sold 100,000 80,000 April 70,000 85,000 May 110,000 90,000 In addition, the selling price was $28; variable production costs were $10; variable selling expenses were $4; fixed overhead costs were $1,000,000 each month; fixed selling expenses are $60,000 each month. BBI expected to produce 80,000 units each month. Beginning inventory for March was 5,000 units. REQUIRED: 1. Prepare a variable cost income statement for each month. 2. Prepare an absorption cost income statement for each month. 3. Reconcile the income statements for each of the three months.
Transcribed Image Text:The manager of the manufacturing division of Bumble Bee Inc. does not understand why income went down when sales went up. Some of the information he has selected for evaluation includes: March Units produced Units sold 100,000 80,000 April 70,000 85,000 May 110,000 90,000 In addition, the selling price was $28; variable production costs were $10; variable selling expenses were $4; fixed overhead costs were $1,000,000 each month; fixed selling expenses are $60,000 each month. BBI expected to produce 80,000 units each month. Beginning inventory for March was 5,000 units. REQUIRED: 1. Prepare a variable cost income statement for each month. 2. Prepare an absorption cost income statement for each month. 3. Reconcile the income statements for each of the three months.
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