Whitman CompanyIncome StatementSales (38,000 units $41.60 per unit)Cost of goods sold (38,000 units x $23 per unit)Gross marginSelling and administrative expenses$ 1,580,800874,000706,800475,000Net operating income$ 231,800The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variabexpenses. The $23 unit product cost given above is computed as follows:Direct materialsDirect laborVariable manufacturing overhead$ 1144Fixed manufacturing overhead ($216,000 + 54,000 units)Absorption costing unit product cost4$ 23Required: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.Required 1Required 2Redo the company's income statement in the contribution format using variable costing.Whitman CompanyVariable Costing Income Statement

Name: Whitman CompanyIncome StatementSales (38,000 units $41.60 per unit)Co
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Description: Whitman CompanyIncome StatementSales (38,000 units $41.60 per unit)Cost of goods sold (38,000 units x $23 per unit)Gross marginSelling and administrative expenses$ 1,580,800874,000706,800475,000Net operating income$ 231,800The company's selling and

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Whitman Company Income Statement Sales (38,000 units $41.60 per unit) Cost of goods sold (38,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,580,800 874,000 706,800 475,000 $ 231,800 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 pe expenses. The $23 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead $ 11 4 4 Fixed manufacturing overhead ($216,000 + 54,000 units) 4 $ 23 Absorption costing unit product cost 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 Income on the absorption costing Income statement above. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement

Whitman Company Income Statement Sales (38,000 units $41.60 per unit) Cost of goods sold (38,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,580,800 874,000 706,800 475,000 $ 231,800 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 pe expenses. The $23 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead $ 11 4 4 Fixed manufacturing overhead ($216,000 + 54,000 units) 4 $ 23 Absorption costing unit product cost 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 Income on the absorption costing Income statement above. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Redo the company's income statement in the contribution format using variable costing. Whitman Company Variable Costing Income Statement

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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During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per unit) $ 976,000 $ 1,586,000 Cost of goods sold (@ $38 per unit) 608,000 988,000 Gross margin 368,000 598,000 Selling and administrative expenses* 299,000 329,000 Net operating income $ 69,000 $ 269,000 * $3 per unit variable; $251,000 fixed each year. The company’s $38 unit product cost is computed as follows: Direct materials $ 7 Direct labor 12 Variable manufacturing overhead 4 Fixed manufacturing overhead ($315,000 ÷ 21,000 units) 15 Absorption costing unit product cost $ 38 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 21,000 21,000 Units sold 16,000 26,000 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.…
During Heaton Company's first two years of operations, It reported absorption costing net operating income as follows: Sales (e $63 per unit) Cost of goods sold (e $37 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 1,071,000 629,000 442,000 298,000 $ 144,000 Year 2 $ 1,701,000 999,000 702,000 328,000 $ 374,000 $3 per unit variable; $247,000 fixed each year. The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($374,000 + 22,000 units) Absorption costing unit product cost $ 5 10 17 $ 37 Production and cost data for the first two years of operations are: Year 1 22,000 17,000 Year 2 Units produced Units sold 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 costing net…
A company reports the following information for the current year: Units Produced (25,000)< Units Sold (15,000), DM ($9 per unit), DL ($11 per unit), VOH (total $75,000) and FOH (total $137,500). If the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under absorption costing. O a. $80,500 O b. $122,500 c. $55,000 O d. $67,500
Determine the amount of sales (units) that would be necessary under Break-Even Sales Under Present and Proposed Conditions Darby Company, operating at full capacity, sold 83,700 units at a price of $48 per unit during the current year. Its income statement for the current year is as follows: Sales $4,017,600 Cost of goods sold 1,984,000 Gross profit $2,033,600 Expenses: Selling expenses $992,000 Administrative expenses 992,000 Total expenses 1,984,000 Income from operations $49,600 The division of costs between fixed and variable is as follows: Variable Fixed Cost of goods sold 70% 30% Selling expenses 75% 25% Administrative expenses 50% 50% Management is considering a plant expansion program that will permit an increase of $336,000 in yearly sales. The expansion will increase fixed costs by $33,600, but…
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The contribution format income statement for Huerra Company for last year is given below: Total Unit $ 998,000 598,800 399,200 319,200 Sales $ 49.90 Variable expenses Contribution margin Fixed expenses 29.94 19.96 15.96 Net operating income Income taxes @ 40% 80,000 4.00 32,000 1.60 Net income $ 48,000 $ 2.40 The company had average operating assets of $506,000 during the year. Required: 1. Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $106,000. (The released funds are used to pay off short-term creditors.) 3.…
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The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 1,008,000 $ 50.40 Variable expenses 604,800 30.24 Contribution margin 403,200 20.16 Fixed expenses 323,200 16.16 Net operating income 80,000 4.00 Income taxes @ 40% 32,000 1.60 Net income $ 48,000 $ 2.40 The company had average operating assets of $499,000 during the year. Required: 5. As a result of a more intense effort by sales people, sales are increased by 10%; operating assets remain unchanged. 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $18,000 is scrapped and written off as a loss, thereby lowering net operating income. 7. At the beginning of the year, the company uses $178,000 of cash (received on accounts receivable) to repurchase some of its common stock.
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Whitman Company has just completed its first year of operations. The company's traditional format income statement for the year follows: Whitman Company Income Statement Sales (35,000 units × $25 per unit) Cost of goods sold (35,000 units × $15 per unit) Gross margin Selling and administrative expenses Net operating income Amount $ 875,000 525,000 350,000 278,000 $ 72,000 The company's selling and administrative expenses consist of $208,000 per year in fixed expenses and $2 per unit sold in variable expenses. The $15 unit product cost given above is computed as follows: Direct materials Direct labor Variable overhead Fixed overhead ($100,000 ÷ 50,000 units) Unit product cost (under traditional costing) $ 6 6 1 2 $15 Required: 1. Prepare a contribution format income statement for the year ended December 31. 2. What was the contribution toward fixed expenses and profits for each unit sold? (State this figure in a single dollar amount per snowboard.) 3. What would operating income be if…