Blizzard, LLC manufactures snowboards. BLLC began 2020 with an inventory of 250 boards. During the year, it produced 1,200 boards and sold 1,400 for $300 each. Fixed production costs were $169,020, and variable production costs were $112 per unit. Fixed advertising, marketing, and other general and administrative expenses were $75,000, and variable shipping costs were $20 per board. Assume that the cost of each unit in beginning inventory is equal to 2020 inventory cost. Blizzard uses a denominator level of 1,200 units. • Prepare an income statement assuming Blizzard uses variable costing. • Prepare an income statement assuming Blizzard uses absorption costing. • Compute the breakeven in units under variable and absorption costing.
Blizzard, LLC manufactures snowboards. BLLC began 2020 with an inventory of 250 boards. During the year, it produced 1,200 boards and sold 1,400 for $300 each. Fixed production costs were $169,020, and variable production costs were $112 per unit. Fixed advertising, marketing, and other general and administrative expenses were $75,000, and variable shipping costs were $20 per board. Assume that the cost of each unit in beginning inventory is equal to 2020 inventory cost. Blizzard uses a denominator level of 1,200 units. • Prepare an income statement assuming Blizzard uses variable costing. • Prepare an income statement assuming Blizzard uses absorption costing. • Compute the breakeven in units under variable and absorption costing.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints
Section: Chapter Questions
Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...
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