Sterling Corporation reports the following information: Units sold Units produced 2009 2010 2011 20,000 20,000 20,000 20,000 24,000 16,000 Fixed production costs $12,00,000 $12,00,000 $12,00,000 Variable production costs per unit $ 200 $ 200 $ 200 Selling price per unit $ 400 $ 400 $ 400 Fixed selling and administrative $ 4,00,000 $ 4,00,000 $ 4,00,000 Calculate the profit each year using variable costing. Explain why profit does not fluctuate from year to year using variable costing.

Check myt 750 900 Number of Canoes Produced and Sold Total costs Variable costs 550 $115,500 $157,500 $189,000 198,000 $387,000 198,000 198,000 $313,500 $355,500 Fixed costs Total costs Cost per unit Variable cost per unit Fixed cost per unit $ 210.00 360.00 $ 210.00 264.00 $ 210.00 220.00 $ 570.00 $ 474.00 $ 430.00 Total cost per unit Riverside sells its canoes for $650 each. Next year Riverside expects to sell 1,000 canoes. Required: Complete the Riverside's contribution margin income statement for each independent scenario. Assuming each scenario is a variation of Riverside's original data. (Round your unit contribution margin and contribution margin ratio to 2 decimal places (i.e. 1234 should be entered as 12.34%) and all other answers to the nearest dollar amount.) Scenario 2 Increase Scenario 3 Scenario 1 Raises Sales Price to $750 per Canoe Sales Price and Variable Cost per Unit by 10 Percent Decrease Fixed Cost by 20 Percent Unit Contribution Margin Contribution Margin Ratio…

60.000 units $75,000 $120,000 $65,000 90,000 units $75,000 $180,000 $80,000 $335,000 Cost A Cost B Cost C $260,000 Total Costs cost Cost C is a О А. fixed О В. mixed O C. variable O D. sunk

Cost Planning for Product Life Cycle... 229 RM800 Revenue Costs Research and development Prototypes Marketing Distribution Year 1 P 900,000 1,150,000 550,000 124,000 170,000 85,000 -0- P(1,179,000) Year 2 Year 3 P1,800,000 P2,000,000 -0- -0- 30,000 200,000 300,000 600,000 20,000 P 650,000 10,000 260,000 410,000 700,000 10,000 P 610,000 Manufacturing Customer service Income Required: 1. How would a product life-cycle income statement differ from this calendar- year income statement? 2. Prepare a three-year life-cycle income statement for both products. Which product appears to be more profitable? 3. Prepare a schedule showing each cost category as a percentage of total annual costs. Pay particular attention to the research and development and customer service categories. What do you think this indicates about the profitability of each product over the three-year life cycle?

50 voitabicaol brus eigaoto Cost Accounting Last year. Abner Company incurred the following costs P 50,000 20,000 130,000 40,000 36,000 bourbo Direct materials Direct labora Factory overhead Selling expense Administrative expense leto Units produced and sold 10,000 units at a price P31 each 13. Prime cost per unit is a. P 7.00 b.P15.00 c. P 5.00 d. P20.00 14. Con ersion cost per unit is a. ? 7. b. P 15.) c P20.00. d. P26.00 15. Cost of goods solt pe unit is stoq 31A a. P 7.0 b. P 15.09 0200 ba c. P 20.00 d. P26.00 16. Gross profit per unit is dshav a. P 11.00 c. P 16.00 d. P 24.00 b. P 15.00 17. Operating income is a. P 24,000 le bivism.ro b. P 110,000 c. P°74,000 d. P110,000

Assume the following information for a company that produced and sold 10,000 units during its first year of operations: Per Unit $ 200 $77 $ 50 $10 Selling price Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Using absorption costing, what is the company's unit product cost? Multiple Choice O $157 O $167 $127 $137 Per Year $ 300,000

Data table Unit Selling Case Price a. b. C. d. GA Unit Variable Operating Costs 70 $ 280 140 20 66 Number of Units Sold 11,000 30,000 20,000 Total Contribution Margin 875,000 5,000,000 1,720,000 Total Fixed Costs 235,000 1,500,000 Operating Income $ 210,000 117,500 920,000

Larner Corporation is a diversified manufacturer of industrial goods. The company's activity-based costing system contains the following six activity cost pools and activity rates: Activity Rates Activity Cost Pool Labor-related Machine-related Machine setups Production orders Shipments General factory ME $ 5.00 per direct labor-hour $ 4.00 per machine-hour $ 60.00 per setup $ 100.00 per order $ 120.00 per shipment $ 4.00 per direct labor-hour Cost and activity data have been supplied for the following products: 378 852 Direct materials cost per unit Direct labor cost per unit $ 3.50 $ 20.00 $ 3.75 Number of units produced per year $9.00 400 2,000 Direct labor-hours Machine-hours Machine setups Production orders Chinmante Total Expected Activity 378 852 1,200 40 2,800 20 4 4 A 7 7 4

Selling price $215 $230 Direct materials (pounds) 23,000 25,000 Direct materials costs per pound $30 $32 Manufacturing capacity for CM5 (units) 11,000 11,000 Conversion costs (fixed costs) $770,000 $803,000 Conversion costs per unit of capacity $70 $73 Manufacturing conversion costs in each year depend on production capacity defined in terms of CM5 units that can be produced. Required: What is the net effect on operating income as a result of the growth component? $51,000 $116,800 $112,000 $166,000

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