6 Data Section: 7 8 Actual production in units 9 Sales in units 10 Sales price per unit 11 Variable manufacturing costs per unit 12 Variable selling costs per unit 13 Fixed manufacturing costs 14 Fixed selling expenses 100,000 80,000 $30 $14 $2 $630,000 $100,000 A 15 - 16 Answer Section: 17 Income statement: Absorption costing 18 19 Sales FORMULA1 20 Cost of goods sold: 21 Variable manufacturing costs 22 Fixed manufacturing costs FORMULA2 FORMULA3 23 24 Total goods available for sale 25 Less ending inventory FORMULA4 26 27 Cost of goods sold 28 29 Gross profit 30 Fixed selling expenses 31 Variable selling expenses FORMULA5 FORMULA6 32 33 Operating income 34 === ==== === 35 Income statement: Variable costing 36 37 Sales $2,400,000 38 Cost of goods sold: 39 Variable manufacturing costs 40 Less ending inventory FORMULA7 FORMULA8 41 42 Variable cost of goods sold 43 44 Manufacturing margin 45 Variable selling expenses FORMULA9 46 47 Contribution margin 48 Fixed manufacturing costs 49 Fixed selling expenses FORMULA10 $100,000 50 51 Operating income 52

Chapter 3- CVP Cost-volume-profit (CVP) analysis requires an understanding of cost behavior: variable and fixed costs. Cost behavior differs from the GAAP-based financial reporting focus: product and period costs. The two ways to categorize costs results in TWo different income statements: Absorption costing income statement: S-C-GM-SA-NI (Key assumption: Split costs into product and period costs) Variable costing income statement: S-VE-CM-FE-NI (Key assumption: Split costs into variable and fixed) 1. 2. Absorption Costing Income Statement Variable Costing Income Statement Sales $500,000 Sales $500,000 Less: Variable expenses Less: Cost of goods sold: Variable (DM+DL+VOH) Fixed (FOH) Gross margin 100,000 Product costs 100,000 60,000 S&A costs 110,000 340,000 Contribution margin 290,000 Less: Fixed expenses Less: Selling & administrative Variable 110,000 Product costs 60,000 Fixed 140,000 S&A costs 140,000 Taxable income $90,000 Taxable income $90,000 LINK THE LINEAR COST FUNCTION TO…

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Sunland Products manufactures and sells a variety of camping products. Recently the company opened a new factory to manufacture a deluxe portable cooking unit. Cost and sales data for the first month of operation are shown below: Beginning inventory Units produced Units sold Manufacturing costs Fixed overhead Variable overhead Direct labour Direct material Selling and administrative costs Fixed Variable 0 units 11,200 10,100 $100,800 $3 $12 $28 $207,100 per unit. per unit per unit $3 per unit sold The portable cooking unit sells for $110. Management is interested in the opening month's results and has asked for an income statement.

The inventory cost computed under absorption costing is ____ the inventory cost computed using variable costing. Group of answer choices half of thrice as much equal to greater than

Under variable costing, which of the following are costs that can be inventoried Select one: O O a. variable manufacturing overhead b. fixed selling and administrative expense c. variable selling and administrative expense d. fixed manufacturing overhead

An analyst is constructing a simple model to determine the gross and net profit of a product, given its profit per unit, quantity sold, and the total costs assigned to the product. The calculation for gross profit is Profit per Unit times Quantity. The calculation for Net Profit is Gross Profit minus Total Costs. A B 1. 2 Profit per Unit 8 3 Quantity |10,100 4 Gross Profit 5 6 Total Costs 6,100 7 8 Net Profit With the values for Profit per Unit, Quantity, and Total Costs shown above, what should the model return for the following calculated cells? Cell Value Gross Profit Net Profit

The cost of the ending inventory under absorption costing is higher than the cost of ending inventory under varibale costing by     1. an amount equal to the fixed overhead cost per unit. 2. an amount computed by multiplying the units in the ending inventory by the fixed costs per unit. 3. an amount equal to the difference in the income amounts under both costing methods. 4. the amount equal to the fixed overhead cost charged to expense during the period.

7. Which of the following is the best definition of a variable cost? A. A variable cost is one which is directly traceable to an activity of the business for which the cost will be used. B. A variable cost is one which is associated with goods or services purchased, or produced, for sale to customers. C. A variable cost is one which changes with changes in the level of activity, over a defined period of time. D. A variable cost is one which is spread over a number of activities of the business for which costs are to be determined.