FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
Bartleby Related Questions Icon

Related questions

Question

help s

**Transcription for Educational Website**

**Security Technology Incorporated (STI) Overview:**

STI is a manufacturer of electronic control systems used in the production of special-duty auto transmissions, primarily for police and military use. The components sell for $61 per unit. In 2021, STI sold 24,300 units. The company began 2021 with no inventory and projects sales of 26,900 units in 2022. The production level is set at 25,600 units for both 2021 and 2022.

- **Variable Manufacturing Costs:** $22 per unit
- **Variable Selling Costs:** $0.40 per unit
- **Fixed Manufacturing Costs:** $128,000 per year
- **Fixed Selling Costs:** $560 per year

**Requirements:**

1. Prepare an income statement for each year using full costing.
2. Prepare an income statement for each year using variable costing.
3. Prepare a reconciliation of the difference each year in operating income from using full and variable costing methods.

**Instructions:**

Complete the tasks by entering answers in the provided tabs.

**Reconciliation Task:**

Prepare a reconciliation of the difference each year in operating income from the full and variable costing methods.

- Use a minus sign for negative amounts.
- Do not round intermediate calculations.
- Round "Fixed overhead rate" answers to two decimal places.
- Round other final answers to the nearest whole dollar amount.

**Table Summary:**

**SECURITY TECHNOLOGY INCORPORATED**

_Reconciling Difference in Operating Income Between Full and Variable Costing_

- **2021:**
  - Change in Inventory in Units: 745,420
  - Multiply Times Fixed Overhead Rate: $3,400.00
  - Difference in Operating Income: $2,534,428,000

- **2022:**
  - Change in Inventory in Units: 935,980
  - Multiply Times Fixed Overhead Rate: $(1,600.00)
  - Difference in Operating Income: $(1,497,568,000)
expand button
Transcribed Image Text:**Transcription for Educational Website** **Security Technology Incorporated (STI) Overview:** STI is a manufacturer of electronic control systems used in the production of special-duty auto transmissions, primarily for police and military use. The components sell for $61 per unit. In 2021, STI sold 24,300 units. The company began 2021 with no inventory and projects sales of 26,900 units in 2022. The production level is set at 25,600 units for both 2021 and 2022. - **Variable Manufacturing Costs:** $22 per unit - **Variable Selling Costs:** $0.40 per unit - **Fixed Manufacturing Costs:** $128,000 per year - **Fixed Selling Costs:** $560 per year **Requirements:** 1. Prepare an income statement for each year using full costing. 2. Prepare an income statement for each year using variable costing. 3. Prepare a reconciliation of the difference each year in operating income from using full and variable costing methods. **Instructions:** Complete the tasks by entering answers in the provided tabs. **Reconciliation Task:** Prepare a reconciliation of the difference each year in operating income from the full and variable costing methods. - Use a minus sign for negative amounts. - Do not round intermediate calculations. - Round "Fixed overhead rate" answers to two decimal places. - Round other final answers to the nearest whole dollar amount. **Table Summary:** **SECURITY TECHNOLOGY INCORPORATED** _Reconciling Difference in Operating Income Between Full and Variable Costing_ - **2021:** - Change in Inventory in Units: 745,420 - Multiply Times Fixed Overhead Rate: $3,400.00 - Difference in Operating Income: $2,534,428,000 - **2022:** - Change in Inventory in Units: 935,980 - Multiply Times Fixed Overhead Rate: $(1,600.00) - Difference in Operating Income: $(1,497,568,000)
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education