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White Water Rafting Company manufactures kayaks, which sell for $595 each. The variable costs of production (per unit) are as follows: Direct Material $210 Direct labor 125 Variable manufacturing overhead 85 Budgeted fixed overhead in 20x1 was $423,000 and budgeted production was 47,000 kayaks. The year's actual production was 47,000 units, of which 38,500 were sold. Variable selling and administrative costs were $6 per unit sold; fixed selling and administ $67000

White Water Rafting Company manufactures kayaks, which sell for $595 each. The variable costs of production (per unit) are as follows: Direct Material $210 Direct labor 125 Variable manufacturing overhead 85 Budgeted fixed overhead in 20x1 was $423,000 and budgeted production was 47,000 kayaks. The year's actual production was 47,000 units, of which 38,500 were sold. Variable selling and administrative costs were $6 per unit sold; fixed selling and administ $67000

FINANCIAL ACCOUNTING
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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White Water Rafting Company manufactures kayaks, which sell for $595 each. The variable costs of production (per unit) are as follows: Direct Material $210 Direct labor 125 Variable manufacturing overhead 85 Budgeted fixed overhead in 20x1 was $423,000 and budgeted production was 47,000 kayaks. The year's actual production was 47,000 units, of which 38,500 were sold. Variable selling and administrative costs were $6 per unit sold; fixed selling and administrative costs were $67,000. Required: A. Calculate the product cost per kayak under (a) absorption costing and (b) variable costing. B. Prepare operating income statements for the year using (a) absorption costing and (b) variable costing. C. Reconcile reported operating income under the two methods using the shortcut method. Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req C Reconcile reported operating income under the two methods using the shortcut method. Change in inventory (in units) predetermined fixed overhead absorption-costing income minus variable-costing rate income 8,500 unit increase $ 9 76,500 %3D
Transcribed Image Text:White Water Rafting Company manufactures kayaks, which sell for $595 each. The variable costs of production (per unit) are as follows: Direct Material $210 Direct labor 125 Variable manufacturing overhead 85 Budgeted fixed overhead in 20x1 was $423,000 and budgeted production was 47,000 kayaks. The year's actual production was 47,000 units, of which 38,500 were sold. Variable selling and administrative costs were $6 per unit sold; fixed selling and administrative costs were $67,000. Required: A. Calculate the product cost per kayak under (a) absorption costing and (b) variable costing. B. Prepare operating income statements for the year using (a) absorption costing and (b) variable costing. C. Reconcile reported operating income under the two methods using the shortcut method. Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Req C Reconcile reported operating income under the two methods using the shortcut method. Change in inventory (in units) predetermined fixed overhead absorption-costing income minus variable-costing rate income 8,500 unit increase $ 9 76,500 %3D
Zhou, Inc. is planning its overhead costs for an upcoming period when 89,000 machine hours are expected to be worked. Activity may drop as low as 82,000 hours if some overdue equipment maintenance procedures are performed; on the other hand, activity could jump to 98,000 hours if one of Zhou's major competitors likely goes bankrupt. A flexible overhead budget would best be based on: Multiple Choice 82,000 hours. 82,000 hours, 89,000 hours, and 98,000 hours. 89,000 hours. 98,000 hours. 82,000 hours and 98,000 hours.
Transcribed Image Text:Zhou, Inc. is planning its overhead costs for an upcoming period when 89,000 machine hours are expected to be worked. Activity may drop as low as 82,000 hours if some overdue equipment maintenance procedures are performed; on the other hand, activity could jump to 98,000 hours if one of Zhou's major competitors likely goes bankrupt. A flexible overhead budget would best be based on: Multiple Choice 82,000 hours. 82,000 hours, 89,000 hours, and 98,000 hours. 89,000 hours. 98,000 hours. 82,000 hours and 98,000 hours.
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