During the first month of operations ended March 31, IceBox Fridgeration Company manufactured 165,000 mini refrigerators, of which 150,000 were sold. Operating data for the month are summarized as follows:41 Sales2 Manufacturing costs.Direct materialsDirect laborVariable manufacturing cost6 Fixed manufacturing cost7 Selling and administrative expenses8 Variable3579FixedTH$1,980,000.004,290,000.00412,500.002,475,000.00$450,000.001,125,000.00$11,250,000.009,157,500.001,575,000.00Required:1. Prepare an income statement based on the absorption costing concept.2. Prepare an income statement based on the variable costing concept.3. Explain the reason for the difference in the amount of operating income reported in (1) and (2)E

Under Absorption Costing, the Fixed manufacturing cost is considered as product cost and absorbed…

Answered: Required: 1. Prepare an income…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Activity based costing is likely a more advantageous costing methold versus traditonal costing, to facilliate which of the following type of analysis? a) analysis of service organization cost b) analysis of channel profitablity c) analysis of long term profitablity d) analysis for reduction selling price of all products? 2. A ___ is any factor that causes a change in the cost of an activity. a) activity based cost b) cost pool c) cost driver d) standard 3. Which of the following is no a basic cost category for indirect cost? a) inventory financing cost b) Volume related cost c) Product batch cost d) activity based cost
2. Distinguish between product costs and period costs. 6. What is the difference between gross margin and manufacturing margin?
True or false Give answer of all with explanation.
The equation for total costs (Y) is: Y = a+ bX In this equation, “a” represents: Net income Cost of goods sold Total fixed costs The level of activity (e.g., the number of units produced) Total variable costs Variable cost per unit of X Total revenue
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.
Great Outdoze Company manufactures sleeping bags, which sell for $66.10 each. The variable costs of production are as follows: Direct material Direct labor Variable manufacturing overhead $19.10 10.30 7.40 k Budgeted fixed overhead in 20x1 was $157,500 and budgeted production was 25,000 sleeping bags. The year's actual production was 25,000 units, of which 21,300 were sold. Variable selling and administrative costs were $1.30 per unit sold; fixed selling and administrative costs were $22,000. at
3.Activity based costing (ABC) is a method of allocating the indirect costs of sales commissions to products. A. true b. false
The _________ is considered part of the cost of the product in absorption costing, but not in variable costing. Group of answer choices Variable Overhead Fixed Overhead Variable Selling & Administrative Fixed Selling and Administrative In the absorption income statement, Sales less Cost of Goods Sold is the calculation for: Group of answer choices Contribution margin Gross margin Net Income Operating Income
2- The ABC costing method * a) is based on the Pareto curve b) is absorption costing c) allows you to track the most important activities d) does not present cost apportionment
What is the difference between variable costing and absorption costing income statements? a. Provide a hypothetical income statement in both formats in which the number of units sold is different from the number of units manufactured. b. Explain the contrast between the two formats.
How is operating income affected if the number of units sold exceeds the number of units produced? Select one: a. Operating income would be higher under a variable costing income statement. b. Operating income would be lower under a variable costing income statement. c. Operating income would be higher under an absorption costing income statement. d. Operating income would be the same under both a variable costing and absorption costing income PreviousSave AnswersNext

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Required: 1. Prepare an income statement based on the absorption costing concept. 2. Prepare an income statement based on the variable costing concept. 3. Explain the reason for the difference in the amount of operating income reported in (1) and (2)