
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question

Transcribed Image Text:Exercise 19-15 (Algo) Absorption costing and overproduction LO C1
A manufacturer reports direct materials of $6 per unit, direct labor of $3 per unit, and variable overhead of $5 per unit. Fixed overhead
is $136,000 per year, and the company estimates sales of 13,600 units at a sales price of $25 per unit for the year. The company has
no beginning finished goods inventory.
1. If the company uses absorption costing, compute gross profit assuming (a) 13,600 units are produced and 13,600 units are sold and
(b) 17,000 units are produced and 13,600 units are sold.
2. If the company uses variable costing, how much would contribution margin differ if the company produced 17,000 units instead of
producing 13,600? Assume the company sells 13,600 units. Hint: Calculations are not required.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
If the company uses absorption costing, compute gross profit assuming (a) 13,600 units are produced and 13,600 units are
sold and (b) 17,000 units are produced and 13,600 units are sold.
Sales
Cost of goods sold
Gross profit
(a) 13,600 Units (b) 17,000 Units
Produced and
13,600 Units Sold
Produced and
13,600 Units Sold
Required 1
Required 2 >
Expert Solution

This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 4 steps

Knowledge Booster
Similar questions
- Don't provide answers in image formatarrow_forwardExercise 19-15 (Algo) Absorption costing and overproduction LO C1 A manufacturer reports direct materials of $6 per unit, direct labor of $3 per unit, and variable overhead of $5 per unit. Fixed overhead Is $156,000 per year, and the company estimates sales of 15,600 units at a sales price of $26 per unit for the year. The company has no beginning finished goods inventory. 1. If the company uses absorption costing, compute gross profit assuming (a) 15,600 units are produced and 15,600 units are sold and (b) 19,500 units are produced and 15,600 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 19,500 units instead of producing 15,600? Assume the company sells 15,600 units. Hint: Calculations are not required. Complete this question by entering your answers in the tabs below. Required 1 Required 2 If the company uses absorption costing, compute gross profit assuming (a) 15,600 units are produced and 15,600 units are…arrow_forwardPlease do not give solution in image format thankuarrow_forward
- A-1arrow_forwardExercise 19-7 (Algo) Income reporting under absorption costing and variable costing LO P2 Sims Company began operations on January 1. Its cost and sales information for this year follow. Direct materials $ 40 per unit Direct labor $ 60 per unit Variable overhead $ 40 per unit Fixed overhead $ 6,300,000 per year Variable selling and administrative expenses $ 11 per unit Fixed selling and administrative expenses $ 5,000,000 per year Units produced 105,000 units Units sold 75,000 units Sales price $ 350 per unit 1. Prepare an income statement for the year using variable costing.2. Prepare an income statement for the year using absorption costing.arrow_forward! Required information Exercise 19-3 (Algo) Income statement under absorption costing and variable costing LO P1, P2 [The following information applies to the questions displayed below.] Cool Sky reports the following for its first year of operations. The company produced 42,000 units and sold 34,000 units at a price of $150 per unit. Direct materials Direct labor Variable overhead Fixed overhead Variable selling and administrative expenses Fixed selling and administrative expenses Exercise 19-3 (Algo) Part 2b Income 2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing. $ 66 per unit $ 25 per unit $9 per unit $546,000 per year. $ 12 per unit $ 100,000 per year Income Statement (Variable Costing)arrow_forward
- Problem 19-4AA (Algo) Converting variable costing income to absorption costing income LO A2 Dowell Company produces a single product. Its income under variable costing for its first two years of operation follow. Variable Costing Income Income Additional Information a. Sales and production data for these first two years follow. Unite Units produced Units sold Direct materials Direct labor Year 1. Year 2 $ 47,000 $ 650,000 Year 1 48,700 37,000 b. The company's $37 per unit product cost (for both years) using absorption costing consists of the following. Year 2 48,700 60,400 Variable overhead Fixed overhead ($470,000/47,000 units) Total product cost per unit Variable costing income Absorption costing income $7 11 9 Required: Prepare a statement to convert variable costing income to absorption costing income for both years. (Leave no cells blank - be certain to enter "0" wherever required.) 10 $ 37 Dowell Company Convert Variable Costing Income to Absorption Costing Income Year 1 $ 47,000…arrow_forwardPlease do not give solution in image format thankuarrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education


Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,

Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON

Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education

Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education