Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the yearfollows:Whitman CompanyIncome StatementSales (39,000 units x $41.60 per unit)Cost of goods sold (39,000 units x $22 per unit)Gross marginSelling and administrative expensesNet operating income.The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variableexpenses. The $22 unit product cost given above is computed as follows:Direct materials.Direct laborVariable manufacturing overheadFixed manufacturing overhead ($235,000 47,000 units)Absorption costing unit product cost$ 1,622,400858,000764,400448,500$ 315,900Required 1 Required 2$9535$ 22Required:1. Redo the company's income statement in the contribution format using variable costing.2. Reconcile any difference between the net operating income on your variable costing income statement and the net operatingincome on the absorption costing income statement above.Complete this question by entering your answers in the tabs below. Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its mostrecent monthly contribution format income statement:SalesVariable expensesContribution marginFixed expensesNet operating income (loss).In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, theAccounting Department has developed the following information:Sales.Variable expenses as a percentage of salesTraceable fixed expenses$ 1,512,000671,520840,480925,000$ (84,520)Req 1Req 2AEast$ 352,000$ 288,000Req 2B518Required:1. Prepare a contribution format income statement segmented by divisions.2-a. The Marketing Department has proposed increasing the West Division's monthly advertising by $22,000 based on the belief that itwould increase that division's sales by 15%. Assuming these estimates are accurate, how much would the company's net operatingincome increase (decrease) if the proposal is implemented?2-b. Would you recommend the increased advertising?Complete this question by entering your answers in the tabs below.DivisionCentral$ 600,00040%$ 321,000Prepare a contribution format income statement segmented by divisions.Total CompanyWest$ 560,00045%$ 193,000EastDivisionCentralWest

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Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units x $41.60 per unit) Cost of goods sold (39,000 units Gross margin Selling and administrative expenses Net operating income Direct materials Direct labor x $22 per unit) The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows: $ 1,622,400 858,000 764,400 448,500 $ 315,900 Variable manufacturing overhead Fixed manufacturing overhead ($235,000 47,000 units) Absorption costing unit product cost $9 5 3 5 $ 22 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. Complete this question by entering your answers in the tabs below.

Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units x $41.60 per unit) Cost of goods sold (39,000 units Gross margin Selling and administrative expenses Net operating income Direct materials Direct labor x $22 per unit) The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows: $ 1,622,400 858,000 764,400 448,500 $ 315,900 Variable manufacturing overhead Fixed manufacturing overhead ($235,000 47,000 units) Absorption costing unit product cost $9 5 3 5 $ 22 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above. Complete this question by entering your answers in the tabs below.

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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2 Trez Company began operations this year. During this year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Income Statement (Absorption Costing) Sales (80,000 units × $45 per unit) $ 3,600,000 Cost of goods sold 2,000,000 Gross profit 1,600,000 Selling and administrative expenses 560,000 Income $ 1,040,000 Additional Information Selling and administrative expenses consist of $400,000 in annual fixed expenses and $2 per unit in variable selling and administrative expenses. The company's product cost of $25 per unit consists of the following. Direct materials $ 4 per unit Direct labor $ 10 per unit Variable overhead $ 4 per unit Fixed overhead ($700,000 / 100,000 units) $ 7 per unit Required:Prepare an income statement for the company under variable costing.
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$62 per unit) Cost of goods sold (@ $40 per unit) Gross margin Selling and administrative expenses* Net operating income * $3 per unit variable; $249,000 fixed each year. The company's $40 unit product cost is computed as follows: Units produced Units sold Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($330,000 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 1 Year 2 $ 1,054,000 $ 1,674,000 1,080,000 594,000 330,000 $ 264,000 Year 1 22,000 17,000 Required 1 680,000 374,000 300,000 $ 74,000 Required 2 Required 3 Year 2 22,000 27,000 Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable…
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ed Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($60 per unit) Year 1 $ Year 2 $ 1,920,000 3,960,000 Cost of goods sold ($45 per unit) 1,440,000 2,970,000 Gross profit 480,000 990,000 Selling and administrative expenses ok Income t 338,000 474,000 $ 142,000 $ 516,000 Additional Information a. Sales and production data for these first two years follow. Year 1 Year 2 nces Units Units produced 49,000 49,000 Units sold 32,000 66,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $45 per unit product cost using absorption costing consists of the following. Direct materials Direct labor $ 12 19 Variable overhead Fixed overhead ($539,000/49,000 units) 3 11 Total product cost per unit $ 45 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and…
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Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (40,000 units x $44.60 per unit) Cost of goods sold (40,000 units x $22 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,784,000 880,000 904,000 460,000 $ 444,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($180,000 + 45,000 units) Absorption costing unit product cost Required: $ 10 5 3 4 $ 22 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…
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Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (42,000 units x $43.60 per unit) Cost of goods sold (42,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,831, 200 966,000 865,200 483,000 $ 382,200 The company's selling and administrative expenses consist of $315,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Direct materials. Direct labor $ 10 4 Variable manufacturing overhead 3 Fixed manufacturing overhead ($276,000 46,000 units) 6 Absorption costing unit product cost $ 23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…
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Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units x $41.60 per unit) Cost of goods sold (39,000 units x $24 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,622,400 936,000 686,400 448,500 $ 237,900 The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows: Direct materials $ 11 Direct labor 5 Variable manufacturing overhead 3 Fixed manufacturing overhead ($260,000 + 52,000 units) Absorption costing unit product cost 5 $ 24 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…