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 K Incorporation for the year ended December 3, 2016.

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Answer 1

Question

Chapter 20, Problem 20.5BPR

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 K Incorporation for the year ended December 3, 2016.

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

To determine: the value of total annual income increase above its present level if Proposal 3 is accepted.

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1. Allocate the joint cost to the Detergent and the Softener using the following:a. Sales value at split-off method b. NRV method 2. Should Carichem have processed each of the products further? What effect does theallocation method have on this decision?

Answer 2

Question

Chapter 20, Problem 20.5BPR

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 K Incorporation for the year ended December 3, 2016.

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

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 3

Question

Chapter 20, Problem 20.5BPR

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 K Incorporation for the year ended December 3, 2016.

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

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 20.5BPR

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 K Incorporation for the year ended December 3, 2016.

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

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 20.5BPR

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 K Incorporation for the year ended December 3, 2016.

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

To determine: the value of total annual income increase above its present level if Proposal 3 is accepted.

Answer 6

Chapter 20, Problem 20.5BPR

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 K Incorporation for the year ended December 3, 2016.

Answer 7

Chapter 20, Problem 20.5BPR

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 K Incorporation for the year ended December 3, 2016.

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

To determine: the value of total annual income increase above its present level if Proposal 3 is accepted.

Answer 13

4.

To determine

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.

To determine: the value of total annual income increase above its present level if Proposal 3 is accepted.

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Chapter 20 Solutions