Zee Corporation operated at 100% of its capacity during the first year of its operations.Additional data is provided below:Selling price is $800 per unit.Production costs (2,000 units):Direct materialsDirect laborVariable factory overheadFixed factory overheadOperating expenses:Variable operating expensesFixed operating expenses$180,000240,000280,000100,000$800,000$130,00050,000180,000If 1500 units are sold during the month, what is the amount of gross profit reportedunder Absorption Costing?Select one:O a. $400,000O b. $200,000O c. $800,000Od. $600,000

Step 1: Under Absorption Costing: Gross Profit is the difference between Sales Revenue & Cost of…

Answered: Zee Corporation operated at 100% of its…

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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Rey Company’s single product sells at a price of $218 per unit. Data for its single product for its first year of operations follow. Direct materials $ 22 per unit Direct labor $ 30 per unit Overhead costs Variable overhead $ 8 per unit Fixed overhead per year $ 220,000 per year Selling and administrative expenses Variable $ 20 per unit Fixed $ 204,000 per year Units produced and sold 22,000 units 1. Prepare an income statement for the year using absorption costing2. Prepare an income statement for the year using variable costing.
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.
Kapol Company's normal capacity is 60,000 units. Since the past few months, it has utilized only one half of this capacity. For last month, the result of its operations is summarized in the following statement: Sales (30,000 units) P 1,500,000 Less Variable Costs 600,000 Contribution Margin 900,000 Less fixed costs 500,000 Profit P 400,000 Of the variable and fixed costs shown on the statement, 4 are manufacturing costs; the balance represents selling and administrative costs. This month, a customer submitted a proposal to buy 35,000 units of Kapol Company's product at P25 per unit. The only selling cost to be incurred for this order is P4.00 per unit representing freight charges that will be shouldered by Kapol. If this special order proves to be acceptable, Kapol is willing to reduce sales to regular customers so as not to exceed its normal capacity. Should the order be accepted? Activate Win
Red Jeep Manufacturing currently produces 3,000 tires per month. The following total cost data for 3,000 tires applies to sales to regular customers: Direct materials Direct manufacturing labor Variable manufacturing overhead Fixed manufacturing overhead Total $114,000 42,000 57,000 60,000 $273,000 Assume Red Jeep sells everything it produces. The plant is considering expanding production to 4,000 tires. What is the total cost of producing 4,000 tires? O $364,000 $202,000 $273,000 $344,000
Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: $ 27 $ 11 $ 6 $ 5 Fixed manufacturing overhead Fixed selling and administrative expenses $ 320,000 $ 60,000 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $55 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 3. Reconcile the difference between…
Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years 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 expenses $ 30 $ 14 $ 3 $ 2 $ 320,000 $ 80,000 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $57 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 3. Reconcile the difference…
ABC Corporation has sold 1,000 units of product in a month and provided the following contribution format income statement. Assume that the following information is within the relevant range.Total sales revenue 50,000 Total variable expenses 32,000 Contribution margin 18,000 Fixed expenses $ 12,000 Net operating income 6,000 The break-even point in unit sales is closest to:
Jay-Zee Company makes an in-car navigation system. Next year, Jay-Zee plans to sell 16,000units at a price of $320 each. Product costs include: Direct materials $68Direct labor $40Variable overhead $12Total fixed factory overhead $500,000 Variable selling expense is a commission of 5 percent of price; fixed selling and administrativeexpenses total $116,400.Required:1. Calculate the sales commission per unit sold. Calculate the contribution margin per unit.2. How many units must Jay-Zee Company sell to break even? Prepare an income statementfor the calculated number of units.3. Calculate the number of units Jay-Zee Company must sell to achieve target operatingincome (profit) of $333,408.4. What if the Jay-Zee Company wanted to achieve a target operating income of $322,000?Would the number of units needed increase or decrease compared to your answer inRequirement 3? Compute the number of units needed for the new target operating income.
Swisher, Incorporated reports the following annual cost data for its single product: Normal production level 30,000 units Direct materials $6.40 per unit Direct labor $3.93 per unit Variable overhead $5.80 per unit Fixed overhead $150,000 in total This product is normally sold for $48 per unit. If Swisher increases its production to 50,000 units, while sales remain at the current 30,000 unit level, by how much would the company's income increase or decrease under variable costing? $60,000 decrease. b. $90,000 decrease. c.There is no change in gross margin. d. $90,000 increase. e. $60,000 increase.
The following information for the past year for the Blaine Corporation has been provided: Fixed costs: Manufacturing $130,000 Marketing 18,000 Administrative 21,000 Variable costs: Manufacturing $113,000 Marketing 35,000 Administrative 38,000 During the year, the company produced and sold 60,000units of product at a selling price of $19.19 per unit. There was no beginning inventory of product at the beginning of the year. What is the contribution margin for the year?
Markson Company had the following results of operations for the past year: Contribution margin income statement Per Unit Annual Total Sales (9,000 units) $ 20.00 $ 180,000 Variable costs Direct materials 4.25 38,250 Direct labor 6.00 54,000 Overhead 2.00 18,000 Contribution margin 7.75 69,750 Fixed costs Fixed overhead 4.25 38,250 Income $ 3.50 $ 31,500 A foreign company offers to buy 2,500 units at $14 per unit. In addition to variable manufacturing and administrative costs, selling these units would increase fixed overhead by $2,000 for the purchase of special tools. Markson’s annual productive capacity is 13,500 units. If Markson accepts this additional business, its profits will:

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