PROBLEM 6-23 Absorption and Variable Costing; Production Constant, Sales Fluctuate LO6-1, LO6-2, LO6-3 Tami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University. Sales (28,000 units). Variable expenses: Variable cost of goods sold.. Variable selling and administrative Contribution margin. Fixed expenses: Fixed manufacturing overhead.. Fixed selling and administrative. Net operating loss Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Required: 1. Units produced Units sold a. $462,000 168,000 Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter. Variable costs per nit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Complete the following: Compute the unit product cost under absorption costing. 300,000 200,000 At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: $1,120,000 30,000 28,000 630,000 490,000 $3.50 $12.00 $1.00 $6.00 500,000 $ (10,000)
PROBLEM 6-23 Absorption and Variable Costing; Production Constant, Sales Fluctuate LO6-1, LO6-2, LO6-3 Tami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University. Sales (28,000 units). Variable expenses: Variable cost of goods sold.. Variable selling and administrative Contribution margin. Fixed expenses: Fixed manufacturing overhead.. Fixed selling and administrative. Net operating loss Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Required: 1. Units produced Units sold a. $462,000 168,000 Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter. Variable costs per nit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Complete the following: Compute the unit product cost under absorption costing. 300,000 200,000 At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: $1,120,000 30,000 28,000 630,000 490,000 $3.50 $12.00 $1.00 $6.00 500,000 $ (10,000)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter12: Activity-based Management
Section: Chapter Questions
Problem 2CE: Assume that at the beginning of 20x2, Cicleta trained the 2 assembly workers in a new approach that...
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