The vice-president, sales of Sweet Acacia Corporation has received the following income statement for November, which was prepared on a variable-costing basis. The firm has just adopted variable costing for its internal reporting.
The vice-president, sales of Sweet Acacia Corporation has received the following income statement for November, which was prepared on a variable-costing basis. The firm has just adopted variable costing for its internal reporting.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter21: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 4PB: Salespersons report and analysis Pachec Inc. employs seven salespersons to sell and distribute its...
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Question
![(a)
The vice-president, sales is not comfortable with the variable-costing system and wonders what the net income would have been
under the previous absorption-costing system.
1. Present the November income statement on an absorption-costing basis.
Sales in units
SWEET ACACIACORPORATION
Absorption-Costing Income Statement
For the Month Ended November 30, 2022
2. Reconcile and explain the difference between the variable-costing and absorption-costing net income figures.
Variable-costing net income
FMOH deferred in ending inventory
FMOH released from beginning inventory
Absorption-costing net income
$
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48f51784-474d-4d94-b66a-ed2617db1f4f%2F5298d09c-f5f6-4bde-82e3-6dbcab646b37%2Feask737_processed.png&w=3840&q=75)
Transcribed Image Text:(a)
The vice-president, sales is not comfortable with the variable-costing system and wonders what the net income would have been
under the previous absorption-costing system.
1. Present the November income statement on an absorption-costing basis.
Sales in units
SWEET ACACIACORPORATION
Absorption-Costing Income Statement
For the Month Ended November 30, 2022
2. Reconcile and explain the difference between the variable-costing and absorption-costing net income figures.
Variable-costing net income
FMOH deferred in ending inventory
FMOH released from beginning inventory
Absorption-costing net income
$
$
![Current Attempt in Progress
The vice-president, sales of Sweet Acacia Corporation has received the following income statement for November, which was
prepared on a variable-costing basis. The firm has just adopted variable costing for its internal reporting.
Sales
Less variable cost of goods sold
Contribution margin
Less fixed manufacturing costs at budget
Gross margin
Less fixed selling and administrative costs
Net income before taxes
1.
2.
SWEET ACACIACORPORATION
Income Statement
3.
For the Month of November
(in thousands)
4.
Variable costs
Fixed costs applied
Total cost
5.
The controller attached the following notes with the statements:
6.
$17
$3,400
1,700
1,700
4
600
$21
1,100
The unit sales price for November averaged $34.
The unit manufacturing costs for the month were as follows:
400
$700
The unit rate for fixed manufacturing costs is a predetermined rate based on a monthly production of 150,000 units.
The variable costs per unit have been stable all year.
Production for November was 44,450 units in excess of sales.
The inventory at November 30 was 96,800 units.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F48f51784-474d-4d94-b66a-ed2617db1f4f%2F5298d09c-f5f6-4bde-82e3-6dbcab646b37%2Fa7a8bwc_processed.png&w=3840&q=75)
Transcribed Image Text:Current Attempt in Progress
The vice-president, sales of Sweet Acacia Corporation has received the following income statement for November, which was
prepared on a variable-costing basis. The firm has just adopted variable costing for its internal reporting.
Sales
Less variable cost of goods sold
Contribution margin
Less fixed manufacturing costs at budget
Gross margin
Less fixed selling and administrative costs
Net income before taxes
1.
2.
SWEET ACACIACORPORATION
Income Statement
3.
For the Month of November
(in thousands)
4.
Variable costs
Fixed costs applied
Total cost
5.
The controller attached the following notes with the statements:
6.
$17
$3,400
1,700
1,700
4
600
$21
1,100
The unit sales price for November averaged $34.
The unit manufacturing costs for the month were as follows:
400
$700
The unit rate for fixed manufacturing costs is a predetermined rate based on a monthly production of 150,000 units.
The variable costs per unit have been stable all year.
Production for November was 44,450 units in excess of sales.
The inventory at November 30 was 96,800 units.
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