Variable Costing Income Statement The following data were adapted from a recent income statement of The Procter & Gamble Company (PG): (in millions) $181,390 Sales Operating costs: Cost of products sold Marketing, administrative, and other expenses Total operating costs $(87,070) (58,040) $(145,110) $36,280 Operating income Assume that the variable amount of each category of operating costs is as follows: (in millions) $48,980 23,580 Cost of products sold Marketing, administrative, and other expenses a. Based on the data given, prepare a variable costing income statement for Procter & Gamble, assuming that the company maintained constant inventory levels during the period. The Procter & Gamble Company Variable Costing Income Statement (assumed) (in millions) Line Item Description Amount Amount Fixed costs: $ b. If Procter & Gamble reduced its inventories during the period, what impact would that have on the operating income determined under absorption costing? If Procter & Gamble reduced its inventories during the period, then the cost of products sold would fixed costs allocated to the beginning inventories. Thus, the total fixed costs of products sold on the

Variable Costing Income Statement The following data were adapted from a recent income statement of The Procter & Gamble Company (PG): (in millions) $181,390 Sales Operating costs: Cost of products sold Marketing, administrative, and other expenses Total operating costs $(87,070) (58,040) $(145,110) $36,280 Operating income Assume that the variable amount of each category of operating costs is as follows: (in millions) $48,980 23,580 Cost of products sold Marketing, administrative, and other expenses a. Based on the data given, prepare a variable costing income statement for Procter & Gamble, assuming that the company maintained constant inventory levels during the period. The Procter & Gamble Company Variable Costing Income Statement (assumed) (in millions) Line Item Description Amount Amount Fixed costs: $ b. If Procter & Gamble reduced its inventories during the period, what impact would that have on the operating income determined under absorption costing? If Procter & Gamble reduced its inventories during the period, then the cost of products sold would fixed costs allocated to the beginning inventories. Thus, the total fixed costs of products sold on the

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 7E: The following data were adapted from a recent income statement of The Procter Gamble Company (PG):...

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The following data were adapted from a recent income statement of The Procter Gamble Company (PG): Assume that the variable amount of each category of operating costs is as follows: a. Based on the data given, prepare a variable costing income statement for Procter Gamble, assuming that the company maintained constant inventory levels during the period. b. If Procter Gamble reduced its inventories during the period, what impact would that have on the operating income determined under absorption costing?
To determine the effect of different levels of production on the company’s income, move to cell B7 (Actual production). Change the number in B7 to the different production levels given in the table below. The first level, 100,000, is the current level. What happens to the operating income on both statements as production levels change? Enter the operating incomes in the following table. Does the level of production affect income under either costing method? Explain your findings.
Summarized data for Backdraft Co. for its first year of operations are as follows: A. Prepare an income statement under absorption costing B. Prepare an income statement under variable costing
Variable-Costing Income Statement Refer to the data for Osterman Company on the previous page. Required: 1. Calculate the cost of goods sold under variable costing. 2. Prepare an income statement using variable costing. Use the following information for Brief Exercises 3-23 and 3-24: During the most recent year, Osterman Company had the following data:
What is the amount of the income from operations that would be reported on the variable costing income statement? a. $519,870 Ob. $426,040 Oc. $511,330 Od. $396,930
Variable Costing Income Statement The following data were adapted from a recent income statement of The Bluth Company: Sales Operating costs: Cost of products sold Marketing, administrative, and other expenses Total operating costs Operating income Cost of products sold Marketing, administrative, and other expenses The Bluth Company Variable Costing Income Assume that the variable amount of each category of operating costs is as follows: Statement (assumed) (in millions) (in millions) $162,030 Fixed costs: $(77,770) (51,850) a. Based on the data given, prepare a variable costing income statement for Bluth, assuming that the company maintained constant inventory levels during the period. $(129,620) $32,410 would be (in millions) $43,750 21,060 b. If the Bluth company reduced its inventories during the period, what impact would that have on the operating income determined under absorption costing? If the Bluth company reduced its inventories during the period, then the cost of products…
Variable and Absorption Costing The following data were adapted from a recent income statement of Ansara Company for the year ended December 31:
Use the data to prepare the cost statement and Income statement by use the Total cost and Variable Cost. Production capacity (6000 ) unit, direct materials (35000 )D. Indirect materials ( 15000 )D., direct wages ( 25 000 )D., Indirect wages (30000 )D. direct expenses ( 25000 )D., Indirect expenses ( 30 000 )D.[ 10000 V., 20000 F.). direct marketing cost (13000 )D. Indirect marketing cost ( 12000 )D.( 10000 V. 2000 F. ). Administration cost (22000 )D., number of F.G.L (1000 )unit . The selling price ( 2500 )D., to unit.
Variable and Absorption Costing The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31:
Learned Corporation has provided the following information: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Sales commissions a. Total product cost b. Total period cost Cost per Unit Cost per Period $ 5.80 $ 4.00 $ 1.60 c. Contribution margin per unit d. Total direct manufacturing cost e. Total indirect manufacturing cost $ 0.70 $ 0.60 Variable administrative expense Fixed selling and administrative expense Required: a. For financial reporting purposes, what is the total amount of product costs incurred to make 6,000 units? b. For financial reporting purposes, what is the total amount of period costs incurred to sell 6,000 units? c. If the selling price is $23.30 per unit, what is the contribution margin per unit sold? Note: Round your answer to 2 decimal places. d. If 7,000 units are produced, what is the total amount of direct manufacturing cost incurred? e. If 7,000 units are produced, what is the total amount of indirect manufacturing…
Use the data to prepare the cost statement and income statement by use the variable cost . The production capacity ( 8 000 )unit , the seal price ( 2000 ) to unit . Direct materials ( 176000) Direct wages ( 128000 ). Direct expenses ( 132000 ) Indirect expenses ( 132000 ). ( 100 000 v. , 32 000 f. ). Marketing cost v. ( 100 000 )D. Administration cost 60000 D. Indirect marketing f. ( 100 000). The balance of f. g. f. ( 2500 ) unit , and the balance of f. g. l. ( 1000 ) unit . The number of sales unit ( ? ) unit
Complete the following income statements using absorption costing. Cost of goods sold: Production volume 300 320 workstations workstations Cost of goods sold per unit Number of workstations sold Total cost of goods sold Bison Business Solutions Absorption Costing Income Statements Production volume 300 320 Sales volume - 300 Workstations workstations workstations volume and sales volume affect the reported net income (loss)? E IUIUwing income statements using variable costing. Under absorption costing, can the difference between production Bison Business Solutions Variable Costing Income Statements Production volume (units) 300 320 workstations 300 workstations workstations 300 Sales volume (units) workstations 0 $ Net income (loss) Under variable costing, can a company increase aomo by increasing production?