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.

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Answer 1

Question

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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Affordable Furniture makes sofas, loveseats, and recliners. The company allocates manufacturing overhead based on direct labor hours. Affordable estimated a total of $1.0 million of manufacturing overhead and 30,000 direct labor hours for the year. Job 310 consists of a batch of 8 recliners.

1. Record the proper journal entry for each transaction. 2. By the end of January, was manufacturing overhead overallocated or underallocated? By how much?

Answer 2

Question

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.

Expert Solution & Answer

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Answer 3

Question

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.

Expert Solution & Answer

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Answer 4

Question

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.

Expert Solution & Answer

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Answer 5

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.

Answer 6

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.

Answer 7

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.

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

The value of total annual income increase above its present level if Proposal 3 is accepted.

Answer 13

4.

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. 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 explains that variable costing is the method that is used by the management for decision making purposes.

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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.

The value of total annual income increase above its present level if Proposal 3 is accepted.

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Chapter 6 Solutions