Managerial Accounting, Loose-leaf Version
Managerial Accounting, Loose-leaf Version
14th Edition
ISBN: 9781337270717
Author: WARREN, Carl S.; Reeve, James M.; Duchac, Jonathan
Publisher: South-Western College Pub
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Chapter 6, Problem 5PA

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.

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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Managerial Accounting, Loose-leaf Version

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What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY