The Greenspace Company started busi- ness on January 1, 2017. The company adopted a standard costing system for the production of ergonomic backpacks. Greenspace chose direct labor as the application base for overhead and decided to use the proration method to account for variances at year-end. In 2017, Greenspace expected to make and sell 160,000 backpacks; each was budgeted to use 2 yards of fabric and require 0.5 hours of direct labor work. The company expected to pay $2 per yard for fabric and compensate workers at an hourly wage of $12. Greenspace has no variable overhead costs, but budgeted $800,000 for fixed manufacturing overhead in 2017. In 2017, Greenspace actually made 180,000 backpacks and sold 144,000 of them for a total revenue of $2,592,000. The costs incurred were as follows: Fixed manufacturing costs Fabric costs (370,000 yards bought and used) Direct manufacturing labor costs (100,000 hours) $ 875,000 $ 758,500 $1,260,000
The Greenspace Company started busi- ness on January 1, 2017. The company adopted a standard costing system for the production of ergonomic backpacks. Greenspace chose direct labor as the application base for overhead and decided to use the proration method to account for variances at year-end. In 2017, Greenspace expected to make and sell 160,000 backpacks; each was budgeted to use 2 yards of fabric and require 0.5 hours of direct labor work. The company expected to pay $2 per yard for fabric and compensate workers at an hourly wage of $12. Greenspace has no variable overhead costs, but budgeted $800,000 for fixed manufacturing overhead in 2017. In 2017, Greenspace actually made 180,000 backpacks and sold 144,000 of them for a total revenue of $2,592,000. The costs incurred were as follows: Fixed manufacturing costs Fabric costs (370,000 yards bought and used) Direct manufacturing labor costs (100,000 hours) $ 875,000 $ 758,500 $1,260,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Compute Greenspace Company’s gross margin for its first year of operation
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 7 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education