Break-even point: Break-even point refers to a point where sales of the company are just good enough to meet all its cost. It is used by the company to know the level of quantity they needed to sales to earn back their cost. Absorption costing: Absorption costing refers to a costing system which allocates not only variable manufacturing cost but also fixed cost to get the cost of goods sold. To prepare: Income statement using variable costing.

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Answer 1

Question

Chapter 9, Problem 9.34P

1.

To determine

Break-even point:

Break-even point refers to a point where sales of the company are just good enough to meet all its cost. It is used by the company to know the level of quantity they needed to sales to earn back their cost.

Absorption costing:

Absorption costing refers to a costing system which allocates not only variable manufacturing cost but also fixed cost to get the cost of goods sold.

To prepare: Income statement using variable costing.

2.

To determine

To prepare: Income statement using absorption costing.

3.

To determine

a.

To compute: Break-even point if W Company uses variable costing.

b.

To determine

To compute: Break-even point if W Company uses absorption costing.

4.

To determine

To compute: Proof of break-even calculations.

5.

To determine

a.

To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.

6.

To determine

To explain: Affect on break-even point on the price increase of a material.

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Answer 2

Question

Chapter 9, Problem 9.34P

1.

To determine

Break-even point:

Break-even point refers to a point where sales of the company are just good enough to meet all its cost. It is used by the company to know the level of quantity they needed to sales to earn back their cost.

Absorption costing:

Absorption costing refers to a costing system which allocates not only variable manufacturing cost but also fixed cost to get the cost of goods sold.

To prepare: Income statement using variable costing.

2.

To determine

To prepare: Income statement using absorption costing.

3.

To determine

a.

To compute: Break-even point if W Company uses variable costing.

b.

To determine

To compute: Break-even point if W Company uses absorption costing.

4.

To determine

To compute: Proof of break-even calculations.

5.

To determine

a.

To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.

6.

To determine

To explain: Affect on break-even point on the price increase of a material.

Expert Solution & Answer

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Answer 3

Question

Chapter 9, Problem 9.34P

1.

To determine

Break-even point:

Break-even point refers to a point where sales of the company are just good enough to meet all its cost. It is used by the company to know the level of quantity they needed to sales to earn back their cost.

Absorption costing:

Absorption costing refers to a costing system which allocates not only variable manufacturing cost but also fixed cost to get the cost of goods sold.

To prepare: Income statement using variable costing.

2.

To determine

To prepare: Income statement using absorption costing.

3.

To determine

a.

To compute: Break-even point if W Company uses variable costing.

b.

To determine

To compute: Break-even point if W Company uses absorption costing.

4.

To determine

To compute: Proof of break-even calculations.

5.

To determine

a.

To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.

6.

To determine

To explain: Affect on break-even point on the price increase of a material.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 9.34P

1.

To determine

Break-even point:

Break-even point refers to a point where sales of the company are just good enough to meet all its cost. It is used by the company to know the level of quantity they needed to sales to earn back their cost.

Absorption costing:

Absorption costing refers to a costing system which allocates not only variable manufacturing cost but also fixed cost to get the cost of goods sold.

To prepare: Income statement using variable costing.

2.

To determine

To prepare: Income statement using absorption costing.

3.

To determine

a.

To compute: Break-even point if W Company uses variable costing.

b.

To determine

To compute: Break-even point if W Company uses absorption costing.

4.

To determine

To compute: Proof of break-even calculations.

5.

To determine

a.

To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.

6.

To determine

To explain: Affect on break-even point on the price increase of a material.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 9.34P

1.

To determine

Break-even point:

Break-even point refers to a point where sales of the company are just good enough to meet all its cost. It is used by the company to know the level of quantity they needed to sales to earn back their cost.

Absorption costing:

Absorption costing refers to a costing system which allocates not only variable manufacturing cost but also fixed cost to get the cost of goods sold.

To prepare: Income statement using variable costing.

2.

To determine

To prepare: Income statement using absorption costing.

3.

To determine

a.

To compute: Break-even point if W Company uses variable costing.

b.

To determine

To compute: Break-even point if W Company uses absorption costing.

4.

To determine

To compute: Proof of break-even calculations.

5.

To determine

a.

To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.

6.

To determine

To explain: Affect on break-even point on the price increase of a material.

Answer 6

Chapter 9, Problem 9.34P

1.

To determine

Break-even point:

Break-even point refers to a point where sales of the company are just good enough to meet all its cost. It is used by the company to know the level of quantity they needed to sales to earn back their cost.

Absorption costing:

Absorption costing refers to a costing system which allocates not only variable manufacturing cost but also fixed cost to get the cost of goods sold.

To prepare: Income statement using variable costing.

Answer 7

Chapter 9, Problem 9.34P

1.

To determine

Break-even point:

Break-even point refers to a point where sales of the company are just good enough to meet all its cost. It is used by the company to know the level of quantity they needed to sales to earn back their cost.

Absorption costing:

Absorption costing refers to a costing system which allocates not only variable manufacturing cost but also fixed cost to get the cost of goods sold.

To prepare: Income statement using variable costing.

Answer 8

2.

To determine

To prepare: Income statement using absorption costing.

Answer 9

2.

To determine

To prepare: Income statement using absorption costing.

Answer 10

3.

To determine

a.

To compute: Break-even point if W Company uses variable costing.

Answer 11

3.

To determine

a.

To compute: Break-even point if W Company uses variable costing.

Answer 12

b.

To determine

To compute: Break-even point if W Company uses absorption costing.

Answer 13

b.

To determine

To compute: Break-even point if W Company uses absorption costing.

Answer 14

4.

To determine

To compute: Proof of break-even calculations.

Answer 15

4.

To determine

To compute: Proof of break-even calculations.

Answer 16

5.

To determine

a.

To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.

Answer 17

5.

To determine

a.

To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.

Answer 18

6.

To determine

To explain: Affect on break-even point on the price increase of a material.

Answer 19

6.

To determine

To explain: Affect on break-even point on the price increase of a material.

Answer 20

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Answer 21

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Answer 22

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Answer 23

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 prepare: Income statement using absorption costing.

a. To compute: Break-even point if W Company uses variable costing.

To compute: Break-even point if W Company uses absorption costing.

To compute: Proof of break-even calculations.

a. To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.

To explain: Affect on break-even point on the price increase of a material.

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Chapter 9 Solutions

a.

To compute: Break-even point if W Company uses variable costing.

a.

To explain: Whether there will any change in the break-even quantity if $20,000 of fixed administrative cost were classified as fixed production cost.