Variable Costing, Absorption Costing During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota), produced 40,100 plastic snow scoops. Snow scoops are oversized shovel-type scoops that are used to push snow away. Unit sales were 38,000 scoops. Fixed overhead was applied at $0.75 per unit produced. Fixed overhead was underapplied by $3,000. This fixed overhead variance was closed to Cost Goods Sold. There was no variable overhead variance. The results of the year's operations are as follows (on an absorption-costing basis): Sales (38,000 units @ $20) Less: Cost of goods sold Gross margin Less: Selling and administrative expenses (all fixed) Operating income Required: 1. Calculate the cost of the firm's ending inventory under absorption costing. Round unit cost to five decimal places. Round your final answer to the nearest dollar. $30,009✔ My Determine the number of units in ending inventory first. Calculate unit cost after determining unadjusted COGS (before adjustment for underapplied fixed overhead). Feedback What is the cost of the ending inventory under variable costing? Round unit cost to five decimal places. Round your final answer to the nearest dollar. $28,514 ✔ Take unit cost under absorption less fixed overhead amount per unit to get variable cost per unit for variable costing. Less: 2. Prepare a variable-costing income statement. Round the unit cost to five decimal places, when required. Round your final answers to the nearest dollar. Use the rounded values in subsequent computations. Snobegon, Inc. Sales Less: Variable cost of goods sold Contribution margin $760,000 547,460 $212.540 Variable-Costing Income Statement For the First Year of Operations Fe 185,500 $27.040 Fixed overhead Fixed selling and administrative expenses ✔ Operating income Check My Work What is the difference between the two income figures? $760.000 $47460 X 212540 X 105.500✔ Use a contribution margin format income statement that groups costs according to behavior (variable and fixed)
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Variable Costing, Absorption Costing
During its first year of operations, Snobegon, Inc. (located in Lake Snobegon, Minnesota), produced 40,100 plastic snow scoops. Snow scoops are oversized shovel-type scoops that are used to push snow away. Unit sales were 38,000 scoops. Fixed
| Sales (38,000 units @ $20) | $760,000 |
| Less: Cost of goods sold | 547,460 |
| Gross margin | $212,540 |
| Less: Selling and administrative expenses (all fixed) | 185,500 |
| Operating income | $ 27,040 |
Required:
Question Content Area
1. Calculate the cost of the firm's ending inventory under absorption costing. Round unit cost to five decimal places. Round your final answer to the nearest dollar.
$fill in the blank 7d1329014064fbe_1
Feedback Area
Determine the number of units in ending inventory first. Calculate unit cost after determining unadjusted COGS (before adjustment for underapplied fixed overhead).
Question Content Area
What is the cost of the ending inventory under variable costing? Round unit cost to five decimal places. Round your final answer to the nearest dollar.
$fill in the blank d3df6e07bfd4fa5_1
Feedback Area
Take unit cost under absorption less fixed overhead amount per unit to get variable cost per unit for variable costing.
Question Content Area
2. Prepare a variable-costing income statement. Round the unit cost to five decimal places, when required. Round your final answers to the nearest dollar. Use the rounded values in subsequent computations.
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$Sales |
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Less: Variable cost of goods sold |
| Contribution margin | $fill in the blank 3a4d5afb7035fb6_5 |
| Less: | |
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Fixed overhead |
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Fixed selling and administrative expenses |
| Operating income | $fill in the blank 3a4d5afb7035fb6_10 |
Feedback Area
Use a contribution margin format income statement that groups costs according to behavior (variable and fixed)
Question Content Area
What is the difference between the two income figures?
$fill in the blank c5f922047f8ffc7_1
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