vy, Inc., produces a single product that sells for $60 per unit. There were no inventories ofwork in process or finished goods. Costs for the year were as follows:Variable costs:Direct materialsDirect laborManufacturing overheadSelling expensesFixed costsManufacturing overheadSelling and administrativeDuring the first three months of the year, production and sales in units were as follows:ProductionSalesJanuaryFebruaryMarch4,0004,0004,000b.$8 per unit$12 per unit$5 per unit$3 per unit$36,000 per month$15,000 per month4,0003,5004,500The company uses an actual cost system. There were no work-in-process inventories at theend of any month.Required:a. Determine the unit cost of production under variable costing and absorption costing for theFeb & March months.Determine income under variable and absorption costing for Feb & March months

vy, Inc. produces a single product that sells for $60 per unit. There were no inventories of work in process or finished goods. Costs for the year were as follows: Variable costs: Direct materials Direct labor Manufacturing overhead Selling expenses Fixed costs: Manufacturing overhead Selling and administrative During the first three months of the year, production and sales in units were as follows: Production Sales 4,000 4,000 4,000 January February March $8 per unit $12 per unit $5 per unit $3 per unit $36,000 per month $15,000 per month 4,000 3,500 4,500 The company uses an actual cost system. There were no work-in-process inventories at the end of any month. Required: a. Determine the unit cost of production under variable costing and absorption costing for the Feb & March months. Determine income under variable and absorption costing for Feb & March months

vy, Inc. produces a single product that sells for $60 per unit. There were no inventories of work in process or finished goods. Costs for the year were as follows: Variable costs: Direct materials Direct labor Manufacturing overhead Selling expenses Fixed costs: Manufacturing overhead Selling and administrative During the first three months of the year, production and sales in units were as follows: Production Sales 4,000 4,000 4,000 January February March $8 per unit $12 per unit $5 per unit $3 per unit $36,000 per month $15,000 per month 4,000 3,500 4,500 The company uses an actual cost system. There were no work-in-process inventories at the end of any month. Required: a. Determine the unit cost of production under variable costing and absorption costing for the Feb & March months. Determine income under variable and absorption costing for Feb & March months

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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Sims Company began operations on January 1. Its cost and sales information for this year follow. Direct materials $ 40 per unit Direct labor $ 60 per unit Variable overhead $ 40 per unit Fixed overhead $ 6,600,000 per year Variable selling and administrative expenses $ 11 per unit Fixed selling and administrative expenses $ 4,000,000 per year Units produced 110,000 units Units sold 80,000 units Sales price $ 360 per unit 1. Prepare an income statement for the year using variable costing.2. Prepare an income statement for the year using absorption costing.
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month July August The product sells for $48 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced 27,000 27,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income $ 108,000 172,000 $ 280,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. $ 5 11 3 2 $ 21 Units Sold 23,000 31,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August $ 1,104,000 $ 1,488,000 529,000 575,000 218,000 $ 357,000 713,000 775,000 234,000…
At the end of the first year of operations, 5,600 units remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: Direct materials $29.10 Direct labor 13.20 Fixed factory overhead 4.80 Variable factory overhead 4.20 Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing concept. Absorption costing $ Variable costing $
Mahoko PLC's planned production for the year just ended was 18,400 units. This production level was achieved, and 21,200 units were sold. Other data follow: Direct material used $ 552,000 Direct labor incurred 259,440 Fixed manufacturing overhead 390,080 Variable manufacturing overhead 198,720 Fixed selling and administrative expenses 329,360 Variable selling and administrative expenses 100,280 Finished-goods inventory, January 1 3,500 units The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. Required: 1. What would be Mahoko PLC’s finished-goods inventory cost on December 31 under the variable-costing method? Note: Do not round intermediate calculations. 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount?
Sims Company began operations on January 1. Its cost and sales information for this year follow. Direct materials $ 30 per unit Direct labor $ 50 per unit Variable overhead $ 40 per unit Fixed overhead $ 6,600,000 per year Variable selling and administrative expenses $ 11 per unit Fixed selling and administrative expenses $ 4,250,000 per year Units produced 110,000 units Units sold 80,000 units Sales price $ 360 per unit 1. Prepare an income statement for the year using variable costing.2. Prepare an income statement for the year using absorption costing.
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 11 $ 4 $ 1 $ 1 $ 308,000 $ 218,000 During the year, the company produced 28,000 units and sold 24,000 units. The selling price of the company's product is $41 per unit. Required: 1. Assume the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.
Ogilvy Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable cost per unit: Direct materials $ 18 Fixed costs per year: Direct labor $ 682,000 Fixed manufacturing overhead $ 824,000 Fixed selling and administrative expenses $ 220,000 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Ogilvy produced 62,000 units and sold 62,000 units. During its second year of operations, it produced 62,000 units and sold 59,800 units. In its third year, Ogilvy produced 62,000 units and sold 64,200 units. The selling price of the company’s product is $46 per unit. Assume the company uses super-variable costing: Compute the unit product cost for Year 1, Year 2, and Year 3. Prepare an income statement for Year 1, Year 2, and Year 3.
Beamish Incorporated, which produces a single product, has provided the following data for its most recent month of operations: Number of units produced 7,600 Variable costs per unit: Direct materials $ 109 Direct labor $ 88 Variable manufacturing overhead $ 5 Variable selling and administrative expense $ 10 Fixed costs: Fixed manufacturing overhead $266,000 Fixed selling and administrative expense $570,000 There were no beginning or ending inventories. The absorption costing unit product cost was:
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 5 Direct labor 10 Variable manufacturing overhead 3 Variable selling and administrative 1 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 108,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 277,000 The product sells for $48 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 27,000 23,000 August 27,000 31,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales $ 1,104,000 $1,488,000 Cost of goods sold 506,000 682,000 Gross margin 598,000 806, 000 Selling and administrative expenses 192,000 200,000 Net operating income $ 406,000 $ 606,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable…
Walton Company incurred manufacturing overhead cost for the year as follows. Direct materials $ 39.00 /unit Direct labor $ 27.40 /unit Manufacturing overhead Variable $ 11.10 /unit Fixed ($18.80/unit for 1,900 units) $ 35,720 Variable selling and administrative expenses $ 10,360 Fixed selling and administrative expenses $ 15,500 The company produced 1,900 units and sold 1,400 of them at $182.00 per unit. Assume that the production manager is paid a 1 percent bonus based on the company’s net income. Required Prepare an income statement using absorption costing. Prepare an income statement using variable costing. Determine the manager’s bonus using each approach. Which approach would you recommend for internal reporting?
Aces Incorporated, a manufacturer of tennis rackets, began operations this year. The company produced 5,600 rackets and sold 4,500. Each racket was sold at a price of $86. Fixed overhead costs are $70,560 for the year, and fixed selling and administrative costs are $64,800 for the year. The company also reports the following per unit variable costs for the year: Direct materials Direct labor Variable overhead Variable selling and administrative expenses Required: Prepare an income statement under absorption costing. ACES INCORPORATED Income Statement (Absorption Costing) Sales Cost of goods sold Gross profit Selling and administrative expenses Income $ $ 387,000 387,000 $ 387,000 $ 11.88 7.88 4.84 1.60
Krepps Corporation produces a single product. Last year, Krepps manufactured 34,250 units and sold 28,800 units. Production costs for the year were as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Sales totaled $1,434,200 for the year, variable selling and administrative expenses totaled $167,560, and fixed selling and administrative expenses totaled $215,775. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the company's net operating income for the year would be: Multiple Choice O $103,550 lower than under absorption costing. O $111,150 lower than under absorption costing. $103,550 higher than under absorption costing. $ 284,275 $ 140,425 $ 256,875 $ 650,750 $111,150 higher than under absorption costing.