Variable and Absorption Costing-Service CompanyLawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $170. The variable and fixed cost data are as follows: Direct labor $100.00 Overhead Variable cost per unit $19.00 Fixed cost $100,000 Marketing, general and administrative Variable cost (per service contract completed) $20.00 Administrative expenses (fixed- per month) $42,000 During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year. a. Calculate reported income for management.Do not use negative signs with any answers. Absorption Costing Income Statement Sales Answer Cost of Goods Sold: Beginning Inventory Answer Variable Costs Answer Fixed Cost Answer Less: Ending Inventory Answer Cost of Goods Sold Answer Answer Answer Answer Answer Administrative expense Answer Net Income Answer b. Calculate reported income for the bank.Do not use negative signs with any answers. Variable Costing Income Statement Sales Answer Cost of Goods Sold: Beginning Inventory Answer Variable Costs Answer Answer Answer Variable cost of goods sold Answer Answer Answer Answer Answer Fixed costs: Answer Answer Administrative Expense Answer Total Fixed Cost Answer Net Income Answer

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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Question

Variable and Absorption Costing-Service Company
Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $170. The variable and fixed cost data are as follows:

Direct labor				$100.00
Overhead
Variable cost per unit				$19.00
Fixed cost				$100,000
Marketing, general and administrative
Variable cost (per service contract completed)				$20.00
Administrative expenses (fixed- per month)				$42,000

During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year.

a. Calculate reported income for management.
Do not use negative signs with any answers.

Absorption Costing Income Statement
Sales		Answer
Cost of Goods Sold:
Beginning Inventory	Answer
Variable Costs	Answer
Fixed Cost	Answer
Less: Ending Inventory	Answer
Cost of Goods Sold		Answer
Answer		Answer
Answer		Answer
Administrative expense		Answer
Net Income		Answer

b. Calculate reported income for the bank.
Do not use negative signs with any answers.

Variable Costing Income Statement
Sales		Answer
Cost of Goods Sold:
Beginning Inventory	Answer
Variable Costs	Answer
Answer	Answer
Variable cost of goods sold		Answer
Answer		Answer
Answer		Answer
Fixed costs:
Answer	Answer
Administrative Expense	Answer
Total Fixed Cost		Answer
Net Income		Answer