Variable Costing: The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory. Absorption Costing: The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period. Income Statement: A part of periodical financial statements that reports the total earnings and expenses for a company or a unit of production is called income statement. To prepare: The income statements for company T under variable costing and absorption costing method.

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Answer 1

Question

Chapter 9, Problem 9.20E

1.

To determine

Variable Costing:

The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory.

Absorption Costing:

The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period.

Income Statement:

A part of periodical financial statements that reports the total earnings and expenses for a company or a unit of production is called income statement.

To prepare: The income statements for company T under variable costing and absorption costing method.

2.

To determine

To compute: The operating income percentage under both the costing methods.

3.

To determine

To explain: The difference in operating income under both the costing methods.

4.

To determine

To identify: The better costing method to be recommended to the CFO of company Z.

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Rivana Co. has a beginning receivables balance on March 1 of $1,280. Sales for March through June are $790, $860, $1,150, and $2,050, respectively. The accounts receivable period is 30 days. What is the amount of the May collections? Assume a year has 360 days.

Answer 2

Question

Chapter 9, Problem 9.20E

1.

To determine

Variable Costing:

The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory.

Absorption Costing:

The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period.

Income Statement:

A part of periodical financial statements that reports the total earnings and expenses for a company or a unit of production is called income statement.

To prepare: The income statements for company T under variable costing and absorption costing method.

2.

To determine

To compute: The operating income percentage under both the costing methods.

3.

To determine

To explain: The difference in operating income under both the costing methods.

4.

To determine

To identify: The better costing method to be recommended to the CFO of company Z.

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Answer 3

Question

Chapter 9, Problem 9.20E

1.

To determine

Variable Costing:

The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory.

Absorption Costing:

The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period.

Income Statement:

A part of periodical financial statements that reports the total earnings and expenses for a company or a unit of production is called income statement.

To prepare: The income statements for company T under variable costing and absorption costing method.

2.

To determine

To compute: The operating income percentage under both the costing methods.

3.

To determine

To explain: The difference in operating income under both the costing methods.

4.

To determine

To identify: The better costing method to be recommended to the CFO of company Z.

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Answer 4

Question

Chapter 9, Problem 9.20E

1.

To determine

Variable Costing:

The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory.

Absorption Costing:

The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period.

Income Statement:

A part of periodical financial statements that reports the total earnings and expenses for a company or a unit of production is called income statement.

To prepare: The income statements for company T under variable costing and absorption costing method.

2.

To determine

To compute: The operating income percentage under both the costing methods.

3.

To determine

To explain: The difference in operating income under both the costing methods.

4.

To determine

To identify: The better costing method to be recommended to the CFO of company Z.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 9.20E

1.

To determine

Variable Costing:

The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory.

Absorption Costing:

The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period.

Income Statement:

A part of periodical financial statements that reports the total earnings and expenses for a company or a unit of production is called income statement.

To prepare: The income statements for company T under variable costing and absorption costing method.

2.

To determine

To compute: The operating income percentage under both the costing methods.

3.

To determine

To explain: The difference in operating income under both the costing methods.

4.

To determine

To identify: The better costing method to be recommended to the CFO of company Z.

Answer 6

Chapter 9, Problem 9.20E

1.

To determine

Variable Costing:

The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory.

Absorption Costing:

The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period.

Income Statement:

A part of periodical financial statements that reports the total earnings and expenses for a company or a unit of production is called income statement.

To prepare: The income statements for company T under variable costing and absorption costing method.

Answer 7

Chapter 9, Problem 9.20E

1.

To determine

Variable Costing:

The variable costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads to the period of production and not to the inventory left unsold or ending inventory.

Absorption Costing:

The absorption costing is a method used to allocate the fixed manufacturing overhead by a company. It allocates these overheads based on the inventory produced and inventory sold. It is based on the approach that the unsold inventory also consist some fixed manufacturing overhead incurred during a period.

Income Statement:

A part of periodical financial statements that reports the total earnings and expenses for a company or a unit of production is called income statement.

To prepare: The income statements for company T under variable costing and absorption costing method.

Answer 8

2.

To determine

To compute: The operating income percentage under both the costing methods.

Answer 9

2.

To determine

To compute: The operating income percentage under both the costing methods.

Answer 10

3.

To determine

To explain: The difference in operating income under both the costing methods.

Answer 11

3.

To determine

To explain: The difference in operating income under both the costing methods.

Answer 12

4.

To determine

To identify: The better costing method to be recommended to the CFO of company Z.

Answer 13

4.

To determine

To identify: The better costing method to be recommended to the CFO of company Z.

Answer 14

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Answer 15

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Answer 16

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Answer 17

Ch. 9 - Differences in operating income between variable...Ch. 9 - Why is the term direct costing a misnomer?Ch. 9 - Do companies in either the service sector or the...Ch. 9 - Explain the main conceptual issue under variable...Ch. 9 - Companies that make no variable-cost/fixed-cost...Ch. 9 - The main trouble with variable costing is that it...Ch. 9 - Give an example of how, under absorption costing,...Ch. 9 - What are the factors that affect the breakeven...Ch. 9 - Critics of absorption costing have increasingly...Ch. 9 - What are two ways of reducing the negative aspects...

To compute: The operating income percentage under both the costing methods.

To explain: The difference in operating income under both the costing methods.

To identify: The better costing method to be recommended to the CFO of company Z.

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Chapter 9 Solutions