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The following information pertains to Vladamir, Inc., for last year: Beginning inventory, units 1,500 Units produced 100,000 Units sold 101,000 Variable costs per unit: Direct materials $8.00 Direct labor $9.00 Variable overhead $2.00 Variable selling expenses $2.00

The following information pertains to Vladamir, Inc., for last year: Beginning inventory, units 1,500 Units produced 100,000 Units sold 101,000 Variable costs per unit: Direct materials $8.00 Direct labor $9.00 Variable overhead $2.00 Variable selling expenses $2.00

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
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Income Statements, Variable and Absorption Costing

Income Statements, Variable and Absorption Costing The following information pertains to Vladamir, Inc., for last year: Beginning inventory, units 1,500 Units produced 100,000 Units sold 101,000 Variable costs per unit: Direct materials $8.00 Direct labor $9.00 Variable overhead $2.00 Variable selling expenses $2.00 Fixed costs per year: Fixed overhead $300,000 Fixed selling and administrative expenses $230,000 There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next. Required: 1. How many units are in ending inventory? units 2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income.
Transcribed Image Text:Income Statements, Variable and Absorption Costing The following information pertains to Vladamir, Inc., for last year: Beginning inventory, units 1,500 Units produced 100,000 Units sold 101,000 Variable costs per unit: Direct materials $8.00 Direct labor $9.00 Variable overhead $2.00 Variable selling expenses $2.00 Fixed costs per year: Fixed overhead $300,000 Fixed selling and administrative expenses $230,000 There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next. Required: 1. How many units are in ending inventory? units 2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income.
3a. Assume the selling price per unit is $30. Prepare an income statement using variable costing. Vladamir, Inc. Variable-Costing Income Statement For Last Year Less: Contribution margin Less: Operating income 3b. Assume the selling price per unit is $30. Prepare an income statement using absorption costing. Vladamir, Inc. Absorption-Costing Income Statement For Last Year Gross profit Operating income
Transcribed Image Text:3a. Assume the selling price per unit is $30. Prepare an income statement using variable costing. Vladamir, Inc. Variable-Costing Income Statement For Last Year Less: Contribution margin Less: Operating income 3b. Assume the selling price per unit is $30. Prepare an income statement using absorption costing. Vladamir, Inc. Absorption-Costing Income Statement For Last Year Gross profit Operating income
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