EXERCISE 6-3 Reconciliation of Absorption and Variable Costing Net Operating Incomes LÖ6-3 Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports. The company provided the following data: Inventories: Beginning (units) Ending (units) Variable costing net operating income Year 1 200 170 $1,080,400 Year 2 170 180 $1,032,400 a. Did inventories increase or decrease during Year 4? b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? Year 3 180 220 $996,400 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Required: 1. Calculate each year's absorption costing net operating income. Present your answer in the form of a reconciliation report. 2. Assume in Year 4 the company's variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012,400.

EXERCISE 6-3 Reconciliation of Absorption and Variable Costing Net Operating Incomes LÖ6-3 Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports. The company provided the following data: Inventories: Beginning (units) Ending (units) Variable costing net operating income Year 1 200 170 $1,080,400 Year 2 170 180 $1,032,400 a. Did inventories increase or decrease during Year 4? b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? Year 3 180 220 $996,400 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Required: 1. Calculate each year's absorption costing net operating income. Present your answer in the form of a reconciliation report. 2. Assume in Year 4 the company's variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012,400.

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Description: EXERCISE 6-3 Reconciliation of Absorption and Variable Costing Net Operating Incomes LO6-3Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing forinternal management reports

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter10: Accounting Systems For Manufacturing Operations

Section: Chapter Questions

Problem 10.25E: Activity-based costing in an insurance company Umbrella Insurance Company carries three major lines...

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EXERCISE 6-3 Reconciliation of Absorption and Variable Costing Net Operating Incomes LO6-3 Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data: Year 1 Year 2 Year 3 Inventories: Beginning (units) Ending (units). Variable costing net operating income. 200 170 180 170 180 220 $1,080,400 $1,032,400 $996,400 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Required: 1. Calculate each year's absorption costing net operating income. Present your answer in the form of a reconciliation report. Assume in Year 4 that the company's variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012,400. a. Did inventories increase or decrease during Year 4? b. How much…
Exercise 6-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO6-3] [The following information applies to the questions displayed below.] Jorgansen Lighting, Incorporated, manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data: Inventories Beginning (units) Ending (units) Variable costing net operating income Year 1 Year 2 Year 3 200 150 150 190 190 230 $ 300,000 $ 269,000 $ 260,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Exercise 6-3 (Algo) Part 1 Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable…
Activity-based costing in an insurance company Umbrella Insurance Company carries three major lines of insurance: auto, workers' compensation, and homeowners. The company has prepared the following report for 20Y2: Management is concerned that the administrative expenses may make some of the insurance lines unprofitable. However, the administrative expenses have not been allocated to the insurance lines. The controller has suggested that the administrative expenses could be assigned to the insurance lines using activity-based costing. The administrative expenses are comprised of five activities. The activities and their rates are as follows: Activity-base usage data for each line of insurance were retrieved from the corporate records and are shown below. a.Complete the product profitability report through the administrative activities. b.Determine the underwriting income as a percent of premium revenue. C.Determine the Operating income as a percent of premium revenue, rounded to one decimal place. d.Interpret the report.
I Problem 5-65 Customer-Profitability Analy- sis, Activity-Based Costing (LO 5-9) Fresno Fiber Optics, Inc. manufactures fiber optic cables for the computer and telecommunications industries. At the request of the company vice president of marketing, the cost management staff has recently completed a customer-profitability study. The following activity-based costing information was the basis for the analysis. 1. Operating income, Trace Telecom: $7,000 Chapter 5 ActivtyBased Costing and Management 225 Customer-Related Activities Cost Driver Base Cost Driver Rate Sales activity Sales visits $1,000 Order taking Purchese orders 200 Units handied. Special handing - Special shipping 50 Shipments 500 Cost-driver data for two of Fresno's customers for the most recent year are Customer-Related Activities Trace Telecom Caltex Computer 8 visits 6 vists Sales activity. Order taking 15 orders 20 orders Special handing. 800 units handled. 600 unts handled Special shipping 18 shipments 20 shipments…
! Required information Exercise 7-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO7-3] [The following information applies to the questions displayed below.] Jorgansen Lighting, Incorporated, manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data: Inventories Exercise 7-3 (Algo) Part 1 Year 1 Beginning (units) Ending (units) 150 190 Variable costing net operating income $ 269,000 The company's fixed manufacturing overhead per unit was constant at $550 for all three years. Year 2 200 150 $ 300,000 Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income Reconciliation of Variable Costing and Absorption Costing Net…
Trend Reporting for Non-Value-Added Costs Cicleta Manufacturing has four activities: receiving materials, assembly, expediting products, and storing goods. Receiving and assembly are necessary activities; expediting and storing goods are unnecessary. The following data pertain to the four activities for the year ending 20x1 (actual price per unit of the activity driver is assumed to be equal to the standard price): Activity Activity Driver SQ AQ SP Receiving Receiving orders 12,000 24,000 $21 Assembly Labor hours 99,000 120,000 15 Expediting Orders expedited 0 8,000 50 Storing Number of units 0 16,000 7 Assume that at the beginning of 20x2, Cicleta trained the assembly workers in a new approach that had the objective of increasing the efficiency of the assembly process. Cicleta also began moving toward a JIT purchasing and manufacturing system. When JIT is fully implemented, the demand for expediting…
Exercise 5-11A (Algo) Allocating facility-level costs and a product elimination decision LO 5-3 Baird Boards produces two kinds of skateboards. Selected unit data for the two boards for the last quarter follow: Production costs Direct materials Direct labor Allocated overhead Total units produced and sold Total sales revenue Basco Boards a. Cost per unit b. Profit $24.20 $ 30.20 $15.10 4, 200 $ 357,000 Basco Boards Baird allocates production overhead using activity-based costing. It allocates delivery expense and sales commissions, which amount to $55,000 per quarter, to the two products equally. Shimano Boards Required a. Compute the per-unit cost for each product. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. b. Compute the profit for each product. $36.40 $51.40 $18.40 8,200 $ 1,000,400 Shimano Boards
Exercise 19-22A (Algo) Converting variable costing Income to absorption costing Income LO A2 A manufacturer reports the following Information for the past three years. Variable costing income Beginning finished goods inventory (units) Ending finished goods Inventory (units) Fixed overhead (FOH) per unit Year 1 $125,000 130,400 Year 3 $131,450 1,788 1,200 1,700 1,200 1,388 $ 3.20 $3.20 $3.20 Compute Income for each of the three years using absorption costing. Hint Fixed overhead In Inventory equals the FOH per unit * Units In Inventory. (Amounts to be deducted should be indicated with a minus sign.) Answer is not complete. Year 1 Year 2 Year 3 Variable costing income $125.000 $ 130,400 $131,450 Fixad overhead in beginning FG Inventory 0 Fixed overhead in ending FG Inventory Absorption costing income
Required information SB Exercise 6-16 through Exercise 6-17 (Static) [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm specializing in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. It classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given below: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Total Company $ 450,000 225,000 225,000 126,000 99,000 63,000 $ 36,000 100% 50% 50% 28% 22% 14% 8% 2010 Chicago $ 150,000 45,000 105,000 78,000 $ 27,000 Office 100% 30% 70% 52% 18% Minneapolis $ 300,000 180,000 120,000 48,000 $ 72,000 100% 60% 40% 16% 24%
Required information Exercise 6-11 (Algo) Absorption costing and variable costing income statements LO P2 [The following information applies to the questions displayed below.] Oak Mart, a producer of solid oak tables, reports the following data from its first year of business. Sales price per unit Units produced this year $ 420 per unit 136,000 units 136,000 units Units sold this year Variable selling and administrative expenses Fixed selling and administrative expenses Direct materials Direct labor Variable overhead: Fixed overhead Exercise 6-11 (Algo) Part 1 1. Prepare the current-year income statement using variable costing. Sales Less: Variable expenses Income $ 32 per unit $4,700,000 per year $ 60 per unit $82 per unit $ 48 per unit $ 10,744,000 per year Exercise 6-11 (Algo) Part 2 OAK MART Income Statement (Variable Costing) Income $ 57,120,000 2. Prepare the current-year income statement using absorption costing. OAK MART Income Statement (Absorption Costing) 0
Required information SB Exercise 7-16 through Exercise 7-17 (Static) [The following information applies to the questions displayed below.] Raner, Harris and Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Net operating income Office Total Company Chicago Minneapolis $ 450,000 100% $ 150,000 100% $ 300,000 100% 225,000 50% 45,000 30% 225,000 50% 105,000 70% 126,000 28% 78,000 52% 99,000 22% $ 27,000 18% 63,000 14% $36,000 8% 180,000 120,000 48,000 60% 40% 16 % $ 72,000 24% Exercise 7-16 Part 3 (Static) Working with a Segmented Income Statement; Break-Even Analysis [LO7-4,…
Problem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, It produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $52 per unit. Required: 1. Compute the company's break-even point in unit sales. 2. Assume the company uses varlable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year…