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Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations: Sales (000s) Production (000s) Production cost Factory-variable (per unit). -fixed (000s) Marketing-variable (per unit) Administrative-fixed (000s) Prior Year 2,400 units 3,200 units $0.60 $1,600 $ 0.40 $ 500 Current Year 4,000 units 3,200 units $0.60 $1,600 $0.40 $ 500 Required: 1. Prepare an income statement for each year based on full costing. 2. Prepare an income statement for each year based on variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method.

Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations: Sales (000s) Production (000s) Production cost Factory-variable (per unit). -fixed (000s) Marketing-variable (per unit) Administrative-fixed (000s) Prior Year 2,400 units 3,200 units $0.60 $1,600 $ 0.40 $ 500 Current Year 4,000 units 3,200 units $0.60 $1,600 $0.40 $ 500 Required: 1. Prepare an income statement for each year based on full costing. 2. Prepare an income statement for each year based on variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method.

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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Required 1 Required 2 Required 3 Prepare an income statement for each year based on full costing. (Enter your answers in thousands of dollars.) YALE COMPANY Full Costing Income Statement Prior Year Less Cost of goods sold Available for sale Cost of goods sold Gross margin Less Selling and administrative costs Operating income Less Cost of goods sold Available for sale Cost of goods sold Contribution margin < Required 1 Less Selling and administrative costs Operating income Required 2 > Change in inventory in units x fixed overhead rate Difference in operating income YALE COMPANY Variable Costing Income Statement Prior Year Current Year YALE COMPANY Reconciling Difference in Operating Income Between Full and Variable Costing Prior Year $ Current Year Current Year 0 $ 0
Transcribed Image Text:Required 1 Required 2 Required 3 Prepare an income statement for each year based on full costing. (Enter your answers in thousands of dollars.) YALE COMPANY Full Costing Income Statement Prior Year Less Cost of goods sold Available for sale Cost of goods sold Gross margin Less Selling and administrative costs Operating income Less Cost of goods sold Available for sale Cost of goods sold Contribution margin < Required 1 Less Selling and administrative costs Operating income Required 2 > Change in inventory in units x fixed overhead rate Difference in operating income YALE COMPANY Variable Costing Income Statement Prior Year Current Year YALE COMPANY Reconciling Difference in Operating Income Between Full and Variable Costing Prior Year $ Current Year Current Year 0 $ 0
Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations: Sales (000s) Production (000s) Production cost Factory-variable (per unit). -fixed (000s) Marketing-variable (per unit) Administrative-fixed (000s) Prior Year 2,400 units 3,200 units $ 0.60 $ 1,600 $ 0.40 $ 500 Current Year 4,000 units 3,200 units $0.60 $1,600 $0.40 $ 500 Required: 1. Prepare an income statement for each year based on full costing. 2. Prepare an income statement for each year based on variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method.
Transcribed Image Text:Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations: Sales (000s) Production (000s) Production cost Factory-variable (per unit). -fixed (000s) Marketing-variable (per unit) Administrative-fixed (000s) Prior Year 2,400 units 3,200 units $ 0.60 $ 1,600 $ 0.40 $ 500 Current Year 4,000 units 3,200 units $0.60 $1,600 $0.40 $ 500 Required: 1. Prepare an income statement for each year based on full costing. 2. Prepare an income statement for each year based on variable costing. 3. Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method.
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