2 part 4 Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. Theabsorption costing income statement for this year follows.Income Statement (Absorption Costing)Sales (80,000 units × $50 per unit)Cost of goods soldGross profitSelling and administrative expensesIncomeAdditional Informationa. Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2 per unit in variable selling andadministrative expenses.b. The company's product cost of $30 per unit consists of the following.Direct materialsDirect laborVariable overheadFixed overhead ($600,000 / 100,000 units)$ 4,000,0002,400,0001,600,000560, 000$ 1,040,000Required:Prepare an income statement for the company under variable costing.SalesLess: Variable expensesVariable cost of goods soldVariable selling and administrative expensesTotal variable costsContribution marginLess: Fixed expensesFixed overheadFixed selling and administrative costsTotal fixed expensesIncome$ 3 per unit$ 18 per unit$ 3 per unit$6 per unitAnswer is complete but not entirely correct.TREZ CompanyIncome Statement (Variable Costing)$2,080,000 X160,000✔$ 600,000400,000$4,000,0002,240,0001,920,0001,000,000$ 920,000

Answer : Calculation of direct material cost = 80,000*$3 = $240,000 Calculation of direct labor cost…

Trez Company began operations this year. During this year, the c absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units x $50 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $4,000,0 2,400, BE 1,600,0 560, 0 $1,040, 06

Trez Company began operations this year. During this year, the c absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units x $50 per unit) Cost of goods sold Gross profit Selling and administrative expenses Income $4,000,0 2,400, BE 1,600,0 560, 0 $1,040, 06

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...

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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.
The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31: Assume that 8,500 million of cost of goods sold and 4,000 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of the year were as follows: Also, assume that 30% of the beginning and ending inventories were fixed costs. a. Prepare an income statement according to the variable costing concept for Caterpillar Inc. Round numbers to nearest million. b. Explain the difference between the amount of operating income reported under the absorption costing and variable costing concepts. Round numbers to nearest million.
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