MANAGERIAL ACCOUNTING FOR MANAGERS
5th Edition
ISBN: 9781264196456
Author: Noreen
Publisher: MCG
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Textbook Question
Chapter 4A, Problem 4A.3E
Super-Variable Costing and Variable Costing Unit Product Costs and Income Statements LO4—2. LO4—6
Kelly Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:
The company does not incur any variable
Required:
- Assume the company uses super-variable costing:
- Compute the unit product cost for Year 1 and Year 2.
- Prepare an income statement for Year 1 and Year 2.
- Assume the company uses a variable costing system that assigns $10 of direct labor cost to each unit produced:
- Compute the unit product cost for Year 1 and Year 2.
- Prepare an income statement for Year 1 and Year 2.
- Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net operating incomes in Years 1 and 2.
Expert Solution & Answer
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Question 3Footfall Manufacturing Ltd. reports the following financial information at the end of the current year:
net sale
$100 000
debtor's turnover ration (based on net sales)
2
inventory turnover ration
1.25
fixed assets turnover ratio
0.8
debt to assets ratio
0.6
net profit margin
5%
gross profit margin
25%
return on investment
2%
Use the given information to fill out the templates for income statement and balance sheet given below:
Income Statement of Footfall Manufacturing Ltd. for the year ending December 31, 20XX(in $)
sales
100,000
cost of goods sold
gross profit
other expenses
earnings before tax
tax @50%
earnings after tax
Balance Sheet of Footfall Manufacturing Ltd. as at December 31, 20XX (in $)
liabilities
amount
assets
amount
equity
net fixed assets
long term debt
50, 000
inventory
short term debt
debtors…
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