Method used to calculate the cash flow from operating activities.

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Chapter 12, Problem 12DQ

(a)

To determine

To identify: Method used to calculate the cash flow from operating activities.

(b)

To determine

To identify: Reason for adding the decrease in accounts receivable while calculating the operating activities.

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Required information [The following information applies to the questions displayed below.] Kitimat Company manufactures winter hats that sell for $42 per unit. The following information pertains to the company's first year of operations in which it produced 40,100 units and sold 37,600 units. Variable costs per unit: Manufacturing: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses 16 $ 16 $ $ 1 $ 2 $401,000 $247,000 9. What would have been the company's variable costing operating income if it had produced and sold 37,600 units?

Required information [The following information applies to the questions displayed below.] Kitimat Company manufactures winter hats that sell for $42 per unit. The following information pertains to the company's first year of operations in which it produced 40,100 units and sold 37,600 units. Variable costs per unit: Manufacturing: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 16 LA LA LA LA $ $ 6612 $401,000 $247,000 4. What is the company's operating income under variable costing?