Variable and absorption costing, explaining operating-income differences. Crystal Clear Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: January February March Unit data Beginning entry 0 100 100 Production 1,400 1375 1430 Sales 1,300 1375 1455 Variable costs Manufacturing cost per unit produced $ 950 Operating (marketing) cost per unit sold $725 Fixed costs Manufacturing costs $490,000 $490,000 $490,000 Operating (marketing) costs $120,000 $120,000 $120,000 The selling price per unit is $3,500. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,400 units. There are no price-, efficiency-, or spending variances. Any production- volume variance is written off to cost of goods sold in the month in which it occurs. Prepare income statements for Crystal Clear in January, February, and March 2017 under (a) variable costing and (b) absorption costing.
Variable and absorption costing, explaining operating-income differences. Crystal Clear Corporation manufactures and sells 50-inch television sets and uses
|
|
January |
February |
March |
|
Unit data |
|
|
|
|
Beginning entry |
0 |
100 |
100 |
|
Production |
1,400 |
1375 |
1430 |
|
Sales |
1,300 |
1375 |
1455 |
|
Variable costs |
|
|
|
|
Manufacturing cost per unit produced |
$ 950 |
|
|
|
Operating (marketing) cost per unit sold |
$725 |
|
|
|
Fixed costs |
|
|
|
|
|
$490,000 |
$490,000 |
$490,000 |
|
Operating (marketing) costs |
$120,000 |
$120,000 |
$120,000 |
The selling price per unit is $3,500. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,400 units. There are no price-, efficiency-, or spending variances. Any production- volume variance is written off to cost of goods sold in the month in which it occurs.
- Prepare income statements for Crystal Clear in January, February, and March 2017 under (a) variable costing and (b) absorption costing.
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