Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Textbook Question
Chapter 10, Problem 3E
The chief executive officer of Acadia, Inc. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Acadia, Inc. be used to prepare comparative statements using variable costing and the company’s absorption costing. The data follow:
The factory produced 80,000 units during the period, and 70,000 units were sold for $700,000.
- 1. Prepare an income statement using variable costing.
- 2. Prepare an income statement using absorption costing.
(Round unit costs to three decimal places.)
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Students have asked these similar questions
Can you help me with the Shawnee Motors Inc variable costing income statement.
The choices are:
Contribution Margin
Fixed Selling & admin expenses
Manufacturing margin
Sales
Variable selling & admin expenses
Variable cost of goods sold
Income from operations
total fixed costs
loss from operations
Please give me instruction on the following step by step:
Variable Costing Income Statement
The following data were adapted from a recent income statement of Bluth Company:
(in millions)
Sales
$313,680
Operating costs:
Cost of products sold
$150,570
Marketing, administrative, and other expenses
100,380
Total operating costs
$250,950
Income from operations
$62,730
Assume that the variable amount of each category of operating costs is as follows:
(in millions)
Cost of products sold
$84,690
Marketing, administrative, and other expenses
40,780
a. Based on the data given, prepare a variable costing income statement for Bluth Company, assuming that the company maintained constant inventory levels during the period.
Bluth Company
Variable Costing Income Statement
(in millions)
$
$
$
Fixed costs:
$
Income from operations
$
b. If Bluth Company reduced its…
Hayek Bikes prepares the income statement under variable costing for its managerial reports, and it prepares
the income statement under absorption costing for external reporting. For its first month of operations, 400
bikes were produced and 240 were sold. Income statement information under variable costing follows.
Sales (240 × $1,700)
Variable cost of goods sold (240 × $625)
Variable selling and administrative expenses (240 × $65)
Contribution margin
Fixed overhead
Fixed selling and administrative expenses
Income
Prepare the company's income statement under absorption costing.
Gross profit
Income
HAYEK BIKES
Income Statement (Absorption Costing)
Loss
Sales
Selling and administrative expenses
$ 408,000
150,000
15,600
242,400
76,000
75,000
$ 91,400
Chapter 10 Solutions
Principles of Cost Accounting
Ch. 10 - What is the difference between absorption costing...Ch. 10 - Distinguish between product costs and period...Ch. 10 - What effect will applying variable costing have on...Ch. 10 - What are the advantages and disadvantages of using...Ch. 10 - Prob. 5QCh. 10 - What is the difference between gross margin and...Ch. 10 - Why are there objections to using absorption...Ch. 10 - What are common costs?Ch. 10 - How is a contribution margin determined, and why...Ch. 10 - What are considered direct costs in segment...
Ch. 10 - What is cost-volume-profit analysis?Ch. 10 - Prob. 12QCh. 10 - What steps are required in constructing a...Ch. 10 - What is the difference between the contribution...Ch. 10 - What impact does income tax have on the break-even...Ch. 10 - Define differential analysis, differential...Ch. 10 - Prob. 17QCh. 10 - Prob. 18QCh. 10 - What are distribution costs?Ch. 10 - What is the purpose of the analysis of...Ch. 10 - In cost analysis, what determines which costs...Ch. 10 - Yellowstone Fabricators uses a process cost system...Ch. 10 - Using the information presented in E10-1, prepare...Ch. 10 - The chief executive officer of Acadia, Inc....Ch. 10 - The following production data came from the...Ch. 10 - A company had income of 50,000, using variable...Ch. 10 - The fixed overhead budgeted for Ranier Industries...Ch. 10 - Columbia Products Inc. has two divisions, Salem...Ch. 10 - The sales price per unit is 13 for the Voyageur...Ch. 10 - Teton, Inc. sells its only product for 50 per...Ch. 10 - A new product is expected to have sales of...Ch. 10 - Augusta Industries manufactures and sells two...Ch. 10 - A company has sales of 1,000,000, variable costs...Ch. 10 - Prob. 13ECh. 10 - A company has prepared the following statistics...Ch. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Redwood Industries needs 20,000 units of a certain...Ch. 10 - Prob. 18ECh. 10 - Biscayne Industries has determined the cost of...Ch. 10 - Roosevelt Enterprises has determined the cost of...Ch. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Arctic Software Inc. has two product lines. The...Ch. 10 - Prob. 7PCh. 10 - The production of a new product required Zion...Ch. 10 - Grand Canyon Manufacturing Inc. produces and sells...Ch. 10 - Prob. 10PCh. 10 - Emerald Island Company is considering building a...Ch. 10 - Royale Aluminum desires an after-tax income of...Ch. 10 - Deuce Sporting Goods manufactures a high-end model...Ch. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 1MCCh. 10 - Denali Company manufactures household products...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- On March 31, the end of the first month of operations, Barnard Inc. manufactured 15,000 units and sold 12,000 units. The following income statement was prepared, based on the variable costing concept: Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.arrow_forwardJellison Company had the following operating data for its first two years of operations: Jellison produced 90,000 units in the first year and sold 80,000. In the second year, it produced 80,000 units and sold 90,000 units. The selling price per unit each year was 12. Jellison uses an actual costing system for product costing. Required: 1. Prepare income statements for both years using absorption costing. Has firm performance, as measured by income, improved or declined from Year 1 to Year 2? 2. Prepare income statements for both years using variable costing. Has firm performance, as measured by income, improved or declined from Year 1 to Year 2? 3. Which method do you think most accurately measures firm performance? Why?arrow_forwardOn April 30, the end of the first month of operations, Joplin Company prepared the following income statement, based on the absorption costing concept: If the fixed manufacturing costs were 450,000 and the fixed selling and administrative expenses were 165,000, prepare an income statement according to the variable costing concept.arrow_forward
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