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 $160. The variable and fixed cost data are as follows: Direct labor $100.00 Overhead Variable cost per unit $10.00 Fixed cost (annual) $100,000 Marketing, general and administrative Variable cost (per service contract completed) $11.00 Administrative expenses (fixed- annual cost) $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
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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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 $160. The variable and fixed cost data are as follows:
| Direct labor | $100.00 | |||
| Variable cost per unit | $10.00 | |||
| Fixed cost (annual) | $100,000 | |||
| Marketing, general and administrative | ||||
| Variable cost (per service contract completed) | $11.00 | |||
| Administrative expenses (fixed- annual cost) | $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 |
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