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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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