FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Absorption and Variable Costing Income Statements for Two Months and Analysis During the first month of operations ended July 31, Head Gear Inc. manufactured 29,300 hats, of which 27,800 were sold. Operating data for the month are summarized as follows: Sales $177,920 Manufacturing costs: Direct materials $105,480 Direct labor 29,300 Variable manufacturing cost 11,720 Fixed manufacturing cost 11,720 158,220 Selling and administrative expenses: Variable $8,340 Fixed 6,090 14,430 During August, Head Gear Inc. manufactured 26,300 hats and sold 27,800 hats. Operating data for August are summarized as follows: Sales $177,920 Manufacturing costs: Direct materials $94,680 Direct labor 26,300 Variable manufacturing cost 10,520 Fixed manufacturing cost 11,720 143,220 Selling and administrative expenses: Variable $8,340 Fixed 6,090 14,430 Required: 1a. Prepare income…arrow_forwardA manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Units in beginning inventory 0 Units produced 4,450 Units sold 4,350 Units in ending inventory 100 Variable costs per unit: Direct materials $ 50 Direct labor $ 52 Variable manufacturing overhead $ 15 Variable selling and administrative expense $ 13 Fixed costs: Fixed manufacturing overhead $93,450 Fixed selling and administrative expense $43,500 What is the variable costing unit product cost for the month? $130 per unit $151 per unit $117 per unit $129 per unitarrow_forwardThe accounting records for Portland Products report the following manufacturing costs for the past year. Direct materials $ 390,000 Direct labor 262,000 Variable overhead 231,000 Production was 170,000 units. Fixed manufacturing overhead was $860,000. For the coming year, costs are expected to increase as follows: direct materials costs by 20 percent, excluding any effect of volume changes; direct labor by 4 percent; and fixed manufacturing overhead by 10 percent. Variable manufacturing overhead per unit is expected to remain the same. Required A: Prepare a cost estimate for a volume level of 136,000 units of product this year. (Do not round intermediate calculations.) Cost Item This Year’s cost Direct materials _______________ Direct labor…arrow_forward
- 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 $ 6,600,000 per year Variable selling and administrative expenses $ 11 per unit Fixed selling and administrative expenses $ 4,000,000 per year Units produced 110,000 units Units sold 80,000 units Sales price $ 360 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_forwardPrior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: 1 Sales (28,800 × $75) $2,160,000.00 2 Manufacturing costs (28,800 units): 3 Direct materials 1,209,600.00 4 Direct labor 316,800.00 5 Variable factory overhead 115,200.00 6 Fixed factory overhead 221,760.00 7 Fixed selling and administrative expenses 28,400.00 8 Variable selling and administrative expenses 34,900.00 The company is evaluating a proposal to manufacture 36,000 units instead of 28,800 units, thus creating an ending inventory of 7,200 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. Required: a. Prepare an estimated income statement, comparing operating results if 28,800 and 36,000 units are manufactured in (1) the absorption costing…arrow_forwardEstimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (23,200 x $81) $1,879,200 Manufacturing costs (23,200 units): Direct materials 1,127,520 Direct labor 266,800 Variable factory overhead 125,280 Fixed factory overhead 148,480 Fixed selling and administrative expenses 40,400 Variable selling and administrative expenses 48,800 The company is evaluating a proposal to manufacture 25,600 units instead of 23,200 units, thus creating an ending inventory of 2,400 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. 1. Prepare an estimated income statement, comparing operating results if 23,200 and 25,600 units are manufactured in the absorption costing format. If an amount box does not…arrow_forward
- The following data pertain to the operations of Deci, Inc. in the most recent month for the production of its only product, which sells for $297: Beginning inventory: 4, 000 Units Produced: 46,000 Units Sold: 47,000 Variable Costs per unit: Direct materials: $84 Direct Labor: $93 Manufacturing Overhead: $18 Selling and Administrative: $30 Fixed Costs: Manufacturing overhead: $1,912, 680 Selling and administrative: $1,954, 260 What is the variable costing unit product cost?arrow_forwardMahoko PLC's planned production for the year just ended was 18,400 units. This production level was achieved, and 21,200 units were sold. Other data follow: Direct material used $ 552,000 Direct labor incurred 259,440 Fixed manufacturing overhead 390,080 Variable manufacturing overhead 198,720 Fixed selling and administrative expenses 329,360 Variable selling and administrative expenses 100,280 Finished-goods inventory, January 1 3,500 units The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. Required: 1. What would be Mahoko PLC’s finished-goods inventory cost on December 31 under the variable-costing method? Note: Do not round intermediate calculations. 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount?arrow_forwardVariable costs per unit: Direct materials A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price Units in beginning inventory Units produced Units sold Units in ending inventory $ 131 0 3,320 2,890 430 $ 45 Direct labor Variable manufacturing overhead $ 15 $ 7 Variable selling and administrative expense Fixed costs: $ 19 Fixed manufacturing overhead $92,960 Fixed selling and administrative expense $28,900 The total gross margin for the month under absorption costing is:arrow_forward
- Absorption and Variable Costing Income Statements During the first month of operations ended July 31, YoSan Inc. manufactured 2,400 flat panel televisions, of which 2,000 were sold. Operating data for the month are summarized as follows: Line Item Description Amount Amount Sales $2,150,000 Manufacturing costs: Direct materials $960,000 Direct labor 420,000 Variable manufacturing cost 156,000 Fixed manufacturing cost 288,000 1,824,000 Selling and administrative expenses: Variable $204,000 Fixed 96,000 300,000 Required: Question Content Area 1. Prepare an income statement based on the absorption costing concept. YoSan Inc.Absorption Costing Income StatementFor the Month Ended July 31 Line Item Description Amount Amount - Cost of goods sold: $- Select - Question Content Area 2. Prepare an income statement…arrow_forwardDenton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 5 Direct labor 10 Variable manufacturing overhead 3 Variable selling and administrative 1 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 108,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 277,000 The product sells for $48 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 27,000 23,000 August 27,000 31,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales $ 1,104,000 $1,488,000 Cost of goods sold 506,000 682,000 Gross margin 598,000 806, 000 Selling and administrative expenses 192,000 200,000 Net operating income $ 406,000 $ 606,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable…arrow_forwardJoplin Company Absorption Costing Income Statement For the Month Ended April 30 Sales (2,500 units) Cost of goods sold: Cost of goods manufactured (2,900 units) Inventory, April 30 (400 units) Total cost of goods sold Gross profit Selling and administrative expenses Operating income $75,400 (10,400) $92,500 (65,000) $27,500 (16,050) $11,450 If the fixed manufacturing costs were $18,096 and the fixed selling and administrative expenses were $7,860, prepare an income statement according to the i variable costing concept. Round all final answers to whole dollars.arrow_forward
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