Variable Costing Variable costing is the method that is used by the management (managers) for decision making purposes. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead . Fixed factory overhead is treated as period (fixed) expense. Contribution Margin Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin. To Determine: The income statement according to the variable costing concept of the Company V for the year ended June 30, 20Y9.

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Answer 1

Question

Chapter 20, Problem 20.5APR

1.

To determine

Variable Costing

Variable costing is the method that is used by the management (managers) for decision making purposes. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The income statement according to the variable costing concept of the Company V for the year ended June 30, 20Y9.

2.

To determine

The amount by which total annual income from operations would be reduced below its presented level if the proposal 2 is accepted.

3.

To determine

To prepare: An income statement in the variable costing format, and indicating the projected annual income from operations if Proposal 3 is accepted.

4.

To determine

The value of total annual income increase above its present level if Proposal 3 is accepted.

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Oriole Company incurs a cost of $34 per unit, of which $19 is variable, to make a product that normally sells for $59. A foreign wholesaler offers to buy 5,200 units at $31 each. Oriole will incur additional costs of $1 per unit to imprint a logo and to pay for shipping. Compute the increase or decrease in net income Oriole will realize by accepting the special order, assuming Oriole has sufficient excess operating capacity. (Enter negative amounts using either a negative sign preceding the number (e.g., -45) or parentheses (e.g., (45)).) Revenues $ Costs Net income $ Reject Accept Increase (Decrease) $ $ Should Oriole Company accept the special order? $ $ Oriole Company should ▾ the special order.

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Answer 2

Question

Chapter 20, Problem 20.5APR

1.

To determine

Variable Costing

Variable costing is the method that is used by the management (managers) for decision making purposes. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The income statement according to the variable costing concept of the Company V for the year ended June 30, 20Y9.

2.

To determine

The amount by which total annual income from operations would be reduced below its presented level if the proposal 2 is accepted.

3.

To determine

To prepare: An income statement in the variable costing format, and indicating the projected annual income from operations if Proposal 3 is accepted.

4.

To determine

The value of total annual income increase above its present level if Proposal 3 is accepted.

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Answer 3

Question

Chapter 20, Problem 20.5APR

1.

To determine

Variable Costing

Variable costing is the method that is used by the management (managers) for decision making purposes. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The income statement according to the variable costing concept of the Company V for the year ended June 30, 20Y9.

2.

To determine

The amount by which total annual income from operations would be reduced below its presented level if the proposal 2 is accepted.

3.

To determine

To prepare: An income statement in the variable costing format, and indicating the projected annual income from operations if Proposal 3 is accepted.

4.

To determine

The value of total annual income increase above its present level if Proposal 3 is accepted.

Expert Solution & Answer

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Answer 4

Question

Chapter 20, Problem 20.5APR

1.

To determine

Variable Costing

Variable costing is the method that is used by the management (managers) for decision making purposes. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The income statement according to the variable costing concept of the Company V for the year ended June 30, 20Y9.

2.

To determine

The amount by which total annual income from operations would be reduced below its presented level if the proposal 2 is accepted.

3.

To determine

To prepare: An income statement in the variable costing format, and indicating the projected annual income from operations if Proposal 3 is accepted.

4.

To determine

The value of total annual income increase above its present level if Proposal 3 is accepted.

Expert Solution & Answer

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Answer 5

Chapter 20, Problem 20.5APR

1.

To determine

Variable Costing

Variable costing is the method that is used by the management (managers) for decision making purposes. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The income statement according to the variable costing concept of the Company V for the year ended June 30, 20Y9.

2.

To determine

The amount by which total annual income from operations would be reduced below its presented level if the proposal 2 is accepted.

3.

To determine

To prepare: An income statement in the variable costing format, and indicating the projected annual income from operations if Proposal 3 is accepted.

4.

To determine

The value of total annual income increase above its present level if Proposal 3 is accepted.

Answer 6

Chapter 20, Problem 20.5APR

1.

To determine

Variable Costing

Variable costing is the method that is used by the management (managers) for decision making purposes. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The income statement according to the variable costing concept of the Company V for the year ended June 30, 20Y9.

Answer 7

Chapter 20, Problem 20.5APR

1.

To determine

Variable Costing

Variable costing is the method that is used by the management (managers) for decision making purposes. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To Determine: The income statement according to the variable costing concept of the Company V for the year ended June 30, 20Y9.

Answer 8

2.

To determine

The amount by which total annual income from operations would be reduced below its presented level if the proposal 2 is accepted.

Answer 9

2.

To determine

The amount by which total annual income from operations would be reduced below its presented level if the proposal 2 is accepted.

Answer 10

3.

To determine

To prepare: An income statement in the variable costing format, and indicating the projected annual income from operations if Proposal 3 is accepted.

Answer 11

3.

To determine

To prepare: An income statement in the variable costing format, and indicating the projected annual income from operations if Proposal 3 is accepted.

Answer 12

4.

To determine

The value of total annual income increase above its present level if Proposal 3 is accepted.

Answer 13

4.

To determine

The value of total annual income increase above its present level if Proposal 3 is accepted.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 20 - What types of costs are customarily included in...Ch. 20 - Which type of manufacturing cost (direct...Ch. 20 - Which of the following costs would be included in...Ch. 20 - In the variable costing income statement, how are...Ch. 20 - Since all costs of operating a business are...Ch. 20 - Discuss how financial data prepared on the basis...Ch. 20 - Why might management analyze product...Ch. 20 - Explain why rewarding sales personnel on the basis...Ch. 20 - Discuss the two factors affecting both sales and...Ch. 20 - How is the quantity factor for an increase or a...

Solution Summary: The author calculates the amount by which total annual income from operations would be reduced below its presented level if proposal 2 is selected.

The amount by which total annual income from operations would be reduced below its presented level if the proposal 2 is accepted.

To prepare: An income statement in the variable costing format, and indicating the projected annual income from operations if Proposal 3 is accepted.

The value of total annual income increase above its present level if Proposal 3 is accepted.

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Chapter 20 Solutions