Texas Controls Inc. began operations in 20X1 to manufacture a single product. There are no ending work-in-process inventories. Relevant data for the year follow: OPERATING DATA FOR 20X1 Quantities: Beginning inventories, finished goods Units produced during the year Units sold during the year Costs: Direct materials ($14 per unit) Direct labor ($12 per unit) Variable factory overhead ($20 per unit) Fixed factory overhead Variable selling and administrative expenses ($19 per unit) Fixed selling and administrative expenses Selling price for each unit Required: 1. Prepare an income statement for 20X1 using direct costing. 2a. Assume that the company has an opportunity to sell 900 units of the product in a foreign country for $71 per unit. No fixed or variable selling and administrative expenses would be incurred in connection with these units except shipping costs of $18 per unit and miscellaneous administrative expenses of $1 per unit. The company has idle capacity, and the order would not affect present markets. Compute marginal income or loss on order. 2b. Would it be profitable for the company to accept the order? Complete this question by entering your answers in the tabs below. Req 1 Analyze: What percentage of the foreign sales order would be realized as marginal income? Req 2a -0- 6,900 6,000 $ 96,600 82,800 138,000 Req 2b Analyze 46,000 114,000 65,000 90
Texas Controls Inc. began operations in 20X1 to manufacture a single product. There are no ending work-in-process inventories. Relevant data for the year follow: OPERATING DATA FOR 20X1 Quantities: Beginning inventories, finished goods Units produced during the year Units sold during the year Costs: Direct materials ($14 per unit) Direct labor ($12 per unit) Variable factory overhead ($20 per unit) Fixed factory overhead Variable selling and administrative expenses ($19 per unit) Fixed selling and administrative expenses Selling price for each unit Required: 1. Prepare an income statement for 20X1 using direct costing. 2a. Assume that the company has an opportunity to sell 900 units of the product in a foreign country for $71 per unit. No fixed or variable selling and administrative expenses would be incurred in connection with these units except shipping costs of $18 per unit and miscellaneous administrative expenses of $1 per unit. The company has idle capacity, and the order would not affect present markets. Compute marginal income or loss on order. 2b. Would it be profitable for the company to accept the order? Complete this question by entering your answers in the tabs below. Req 1 Analyze: What percentage of the foreign sales order would be realized as marginal income? Req 2a -0- 6,900 6,000 $ 96,600 82,800 138,000 Req 2b Analyze 46,000 114,000 65,000 90
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Topic Video
Question
Transcribed Image Text:Texas Controls Inc. began operations in 20X1 to manufacture a single product. There are no ending work-in-process inventories.
Relevant data for the year follow:
OPERATING DATA FOR 20X1
Quantities:
Beginning inventories, finished goods
Units produced during the year
Units sold during the year
Costs:
Direct materials ($14 per unit)
Direct labor ($12 per unit)
Variable factory overhead ($20 per unit)
Fixed factory overhead
Variable selling and administrative expenses ($19 per unit)
Fixed selling and administrative expenses
Selling price for each unit
Required:
1. Prepare an income statement for 20X1 using direct costing.
2a. Assume that the company has an opportunity to sell 900 units of the product in a foreign country for $71 per unit. No fixed or
variable selling and administrative expenses would be incurred in connection with these units except shipping costs of $18 per unit
and miscellaneous administrative expenses of $1 per unit. The company has idle capacity, and the order would not affect present
markets. Compute marginal income or loss on order.
2b. Would it be profitable for the company to accept the order?
Analyze:
What percentage of the foreign sales order would be realized as marginal income?
Complete this question by entering your answers in the tabs below.
Req 1
Req 2a
Req 2b
-0-
6,900
6,000
$ 96,600
82,800
138,000
46,000
114,000
65,000
90
Analyze
Would it be profitable for the company to accept the order?
Would it be profitable for the company to accept the order?
< Req 2a
Analyze >
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