Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 7, Problem 17E
Variable costing income statement for a service company
East Coast Railroad Company transports commodities among three routes (city-pairs): Atlanta/Baltimore, Baltimore/Pittsburgh, and Pittsburgh/Atlanta. Significant costs, their cost behavior, and activity rates for April are as follows:
Operating statistics from the management information system reveal the following for April:
- A. Prepare a contribution margin by route report for East Coast Railroad Company for the month of April. Compute the contribution margin ratio in whole percents, rounded to one decimal place.
- B. Evaluate the route performance of the railroad using the report in (A).
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The controller at Wesson Company's manufacturing plant has provided you with the following information for the first quarter's
operations:
Direct materials
Fixed manufacturing overhead costs
Sales price
Variable manufacturing overhead
Direct labor
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Required:
a. Prepare a gross margin income statement.
b. Prepare a contribution margin income statement.
Complete this question by entering your answers
Required A Required B
Prepare a contribution margin income statement.
Contribution Margin Income Statement
Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month.
The following data summarize the results for July:
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Production costs (17,000 units):
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$754,800
Direct labor
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Fixed factory overhead
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1,419,500
Selling and administrative expenses:
Variable selling and administrative expenses
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Fixed selling and administrative expenses
85,200
305,200
If required, round interim per-unit calculations to the nearest cent.
a. Prepare an income statement according to the absorption costing concept.
Gallatin County Motors Inc.
Absorption Costing Income
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For the Month Ended July 31
$
A manufacturer uses activity-based costing to assign overhead costs to products. Budgeted cost information for
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Activity
Purchasing
Cleaning factory
Providing utilities
Activity cost pool
Purchasing
Factory
Expected Cost
$127,600
31,500
63,070
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Compute activity rates for each of the cost pools. (Round your answers to 2 decimal places.)
Expected
Amount of
Cost Driver
Cost Driver
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Square feet
Square feet
4,400
4,900
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Chapter 7 Solutions
Managerial Accounting
Ch. 7 - What types of costs are customarily included in...Ch. 7 - Which type of manufacturing cost (direct...Ch. 7 - Which of the following costs would be included in...Ch. 7 - In the variable costing income statement, how are...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Discuss how financial data prepared on the basis...Ch. 7 - Prob. 8DQCh. 7 - Explain why rewarding sales personnel on the basis...Ch. 7 - Explain why service companies use different...
Ch. 7 - Variable costing Marley Company has the following...Ch. 7 - Prob. 2BECh. 7 - Variable costingsales exceed production The...Ch. 7 - Prob. 4BECh. 7 - Contribution margin by segment The following...Ch. 7 - At the end of the first year of operations, 21,500...Ch. 7 - Gallatin County Motors Inc. assembles and sells...Ch. 7 - Fresno Industries Inc. manufactures and sells...Ch. 7 - On March 31, the end of the first month of...Ch. 7 - On April 30, the end of the first month of...Ch. 7 - On October 31, the end of the first month of...Ch. 7 - The following data were adapted from a recent...Ch. 7 - Estimated income statements, using absorption and...Ch. 7 - The following data were adapted from a recent...Ch. 7 - Prob. 10ECh. 7 - Explain why service companies use different...Ch. 7 - Galaxy Sports Inc. manufactures and sells two...Ch. 7 - Prob. 13ECh. 7 - Sales territory and salesperson profitability...Ch. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Variable costing income statement for a service...Ch. 7 - Variable costing income statement for a service...Ch. 7 - Prob. 1PACh. 7 - The demand for solvent, one of numerous products...Ch. 7 - During the first month of operations ended May 31,...Ch. 7 - Salespersons report and analysis Walthman...Ch. 7 - Segment variable costing income statement and...Ch. 7 - Absorption and variable costing income statements...Ch. 7 - Income statements under absorption costing and...Ch. 7 - Absorption and variable costing income statements...Ch. 7 - Prob. 4PBCh. 7 - Variable costing income statement and effect on...Ch. 7 - Prob. 1MADCh. 7 - Prob. 2MADCh. 7 - Prob. 3MADCh. 7 - Segment disclosure by Apple Inc. (AAPL) provides...Ch. 7 - Prob. 1TIFCh. 7 - Inventory effects under absorption costing BendOR,...Ch. 7 - Communication Bon Jager Inc. manufactures and...Ch. 7 - Prob. 1CMACh. 7 - Chassen Company, a cracker and cookie...Ch. 7 - Prob. 3CMACh. 7 - Bethany Company has just completed the first month...
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