General Accounting question The net profit of a company for a year on a variablecosting basis is $85,000 on an absorption costing basis.the net profit is $73,000. Fixed manufacturing overheadcosts per unit were the same in both the prior and currentyear (i.e. $1.20 per unit).What was the change in inventory over the year?A. Decrease of 10,000 unitsB. Increase of 10,000 unitsC. Increase of 12,000 unitsD. Decrease of 8,000 units

Step 1: Define Absorption CostingAbsorption Costing is a method that treats fixed manufacturing…

Answered: The net profit of a company for a year…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 6EA: During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of...

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Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: At the beginning of last year, Elway had 28,300,000 in operating assets. At the end of the year, Elway had 23,700,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin and turnover ratios for last year. (Note: Round the answer for margin ratio to two decimal places.) 3. Compute ROI. (Note: Round answer to two decimal places.) 4. CONCEPTUAL CONNECTION Briefly explain the meaning of ROI. 5. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).
Ellerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Refer to Exercise 2.21. Last calendar year, Ellerson recognized revenue of 1,312,000 and had selling and administrative expenses of 204,600. Required: 1. What is the cost of goods sold for last year? 2. Prepare an income statement for Ellerson for last year.
During the current year. Plainfield Manufacturing earned income of $845,000 from total sales of $9,350,000 and average capital assets of $13,500,000. What is the sales margin?
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The level of inventory of a manufactured product has increased by 6,980 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $10.00 $3.00 Unit operating expenses of the period 1.00 5.00 The effect on operating income if absorption costing is used rather than variable costing would be a a.$55,840 decrease b.$55,840 increase c.$20,940 decrease d.$20,940 increase
The level of inventory of a manufactured product has increased by 7,780 units during a period. The following data are also available: Fixed $4.00 1.00 Variable Unit manufacturing costs of the period Unit operating expenses of the period The effect on operating income if absorption costing is used rather than variable costing would be a Oa. a. $31,120 decrease Ob. $38,900 increase Oc. $38,900 decrease d. $31,120 increase $13.00 2.00
The level of inventory of a manufactured product has increased by 7,819 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $13.00 $8.00 Unit operating expenses of the period 1.00 3.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) a.$86,009 increase b.$86,009 decrease c.$62,552 decrease d.$62,552 increase
The level of inventory of a manufactured product has increased by 8,366 units during a period. The following data are also available: Line Item Description Variable Fixed Unit manufacturing costs of the period $14.00 $8.00 Unit operating expenses of the period 2.00 4.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) a. $100,392 increase b. $66,928 decrease c. $66,928 increase d. $100,392 decrease
The level of inventory of a manufactured product has increased by 7,827 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $13 $3 Unit operating expenses of the period $4 $1 What would be the effect on income from operations if absorption costing is used rather than variable costing? a.$23,481 increase b.$31,308 increase c.$23,481 decrease d.$31,308 decrease
The level of inventory of a manufactured product has increased by 7,534 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12 $7 Unit operating expenses of the period $2 $1 What would be the effect on income from operations if variable costing is used rather than absorption costing? a.$60,272 decrease b.$52,738 decrease c.$52,738 increase d.$60,272 increase
The level of inventory of a manufactured product has increased by 7,949 units during a period. The following data are also available: Variable Fixed Unit manufacturing costs of the period $12.00 $5.00 Unit operating expenses of the period 4.00 4.00 The effect on operating income if variable costing is used rather than absorption costing would be a(n) a.$71,541 decrease b.$39,745 increase c.$39,745 decrease d.$71,541 increase
The level of inventory of a manufactured product has increased by 5,000 units during a period. The following data are also available: Unit manufacturing costs of the period Unit operating expenses of the period Variable Fixed $24.00 $10.00 8.00 3.00 The effect on operating income if variable costing is used rather than absorption costing would be a a. $65,000 decrease O b. $50,000 decrease Oc. $50,000 increase O d. $65.000 increase

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