The VARCOST2 worksheet is capable of calculating variable and absorption income when unit sales are equal to or less than production. An equally common situation (that this worksheet cannot handle) is when beginning inventory is present and sales volume exceeds production volume. Revise the worksheet Data Section to include:Beginning inventory in units 15,000Beginning inventory cost (absorption) $266,875Beginning inventory cost (variable) $210,000,Also, change actual production to 70,000. Revise the Answer Section to accommodate this new data. Assume that Anderjak uses the weighted-average costing method for inventory. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Check figure: Absorption income, $670,000. VARCOSTVariable CostingData SectionActual production in unitsSales in unitsSales price per unitVariable manufacturing costs per unitVariable selling costs per unitFixed manufacturing costsFixed selling expenses100,00080,000$30$14$2$315,000$100,000Answer SectionIncome statement: Absorption costingSales$2,400,000Cost of goods sold:Variable manufacturing costsFixed manufacturing costsTotal goods available for saleLess ending inventoryCost of goods sold$1,400,000315,000$1,715,000343,0001,372,000$1,028,000Gross profitSelling expenses:Fixed selling expensesVariable selling expensesTotal selling expenses$100,000160,000260,000$768,000Operating incomeIncome statement: Variable costingSales$2,400,000Cost of goods sold:Variable manufacturing costsLess ending inventoryVariable cost of goods sold$1,400,000280,0001,120,000$1,280,000Manufacturing marginVariable selling expensesContribution marginFixed costs:Fixed manufacturing costsFixed selling expenses160,000$1,120,000$315,000100,000Total fixed costs415,000Operating income$705,000

The question is based on the concept of Cost Accounting.

Answered: The VARCOST2 worksheet is capable of…

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 VARCOST2 worksheet is capable of calculating variable and absorption income when unit sales are equal to or less than production. An equally common situation (that this worksheet cannot handle) is when beginning inventory is present and sales volume exceeds production volume. Revise the worksheet Data Section to include:

Beginning inventory in units 15,000

Beginning inventory cost (absorption) $266,875

Beginning inventory cost (variable) $210,000,

Also, change actual production to 70,000. Revise the Answer Section to accommodate this new data. Assume that Anderjak uses the weighted-average costing method for inventory. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Check figure: Absorption income, $670,000.