Concept introduction:
Absorption costing:
The method of costing where both fixed and variable costs are charged to the products Absorption costing absorbs the costs which are directly related to the product. The fixed
Requirement 1:
Calculate the product cost by using the absorption costing and variable costing method.
Concept introduction:
Income statement:
The income statement tells about the revenues earned and expenses incurred by the company in a specific period of time. It is also known as operations statement, earnings statement, revenue statement or profit, and loss statement.
Requirement 2:
Prepare contribution format variable costing income statements for the given months.
Concept introduction:
Requirement 3:
Establish the relationship between the variable costing and absorption costing net operating income figures.
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Chapter 4 Solutions
MANAGERIAL ACCOUNTING
- Apsara Beverages Co. uses process costing to account for the production of bottled sports drinks. Direct materials are added at the beginning of the process, and conversion costs are incurred uniformly throughout the process. Equivalent units have been calculated to be 21,600 units for materials and 18,000 units for conversion costs. Beginning inventory consisted of $13,500 in materials and $7,200 in conversion costs. May costs were $62,400 for materials and $72,000 for conversion costs. The ending inventory still in process was 7,000 units (100% complete for materials, 50% for conversion). The cost per equivalent unit for materials using the weighted-average method would be____.arrow_forwardHelparrow_forwardChoose best answerarrow_forward
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