Variable Costing Managers frequently use variable costing for internal purposes for decision making. 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 calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

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Answer 1

Question

Chapter 6, Problem 21E

A.

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for decision making. 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 calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

B.

To determine

To prepare: A table for contribution margin analysis to evaluate management action in may.

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L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question:

The standard rate per direct labor hour should

L.L. Bean operates two factories that produce its popular Bean boots (also known as "duck boots") in its home state of Maine. Since L.L. Bean prides itself on manufacturing its boots in Maine and not outsourcing, backorders for its boots can be high. In 2014, L.L. Bean sold about 450,000 pairs of the boots. At one point during 2014, it had a backorder level of about 100,000 pairs of boots. L.L. Bean can manufacture about 2,200 pairs of its duck boots each day with its factories running 24/7. In 2015, L.L. Bean expects to sell more than 500,000 pairs of its duck boots. As of late November 2015, the backorder quantity for Bean Boots was estimated to be about 50,000 pairs. Question: 1. Assume that 5% of the L.L. Bean boots are returned by customers for various reasons. L. Bean has a 100% refund policy for returns, no matter what the reason. What would the journal entry be to accrue L.L. Bean's sales returns for this one pair of boots? (Note: L.L. Bean most likely will make…

Answer 2

Question

Chapter 6, Problem 21E

A.

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for decision making. 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 calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

B.

To determine

To prepare: A table for contribution margin analysis to evaluate management action in may.

Expert Solution & Answer

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Answer 3

Question

Chapter 6, Problem 21E

A.

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for decision making. 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 calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

B.

To determine

To prepare: A table for contribution margin analysis to evaluate management action in may.

Expert Solution & Answer

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Answer 4

Question

Chapter 6, Problem 21E

A.

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for decision making. 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 calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

B.

To determine

To prepare: A table for contribution margin analysis to evaluate management action in may.

Expert Solution & Answer

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Answer 5

Chapter 6, Problem 21E

A.

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for decision making. 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 calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

B.

To determine

To prepare: A table for contribution margin analysis to evaluate management action in may.

Answer 6

Chapter 6, Problem 21E

A.

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for decision making. 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 calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

Answer 7

Chapter 6, Problem 21E

A.

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for decision making. 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 calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

Answer 8

B.

To determine

To prepare: A table for contribution margin analysis to evaluate management action in may.

Answer 9

B.

To determine

To prepare: A table for contribution margin analysis to evaluate management action in may.

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

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Answer 13

Ch. 6 - What types of costs are customarily included in...Ch. 6 - Which type of manufacturing cost (direct...Ch. 6 - Which of the following costs would be included in...Ch. 6 - In the variable costing income statement, how are...Ch. 6 - Prob. 5DQ Ch. 6 - Discuss how financial data prepared on the basis...Ch. 6 - Prob. 7DQ Ch. 6 - Explain why rewarding sales personnel on the basis...Ch. 6 - Prob. 9DQ Ch. 6 - Prob. 10DQ

Solution Summary: The author analyzes the contribution margin ratio for Atlanta/Baltimore route.

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To prepare: A table for contribution margin analysis to evaluate management action in may.

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