The P. Talbot Company was organized just one month ago. The company manufactures and sells a unique product that has been quickly accepted by consumers. The results of the company’s first month of operations are shown below (absorption costing basis): Sales (10,000 units @ $20) $200,000 Less Cost of Goods Sold 140,000 Gross Margin 60,000 Less Selling and Administrative expenses 45,000 Net Income $15,000 Variable selling and administrative expenses are $2 per unit. The company produced 12,000 units during the month. Variable manufacturing costs total $10 per unit, and fixed manufacturing overhead costs total $48,000 per month. What is the ending inventory value using full-absorption costing?_________ Using a Variable costing basis Income statement:What would be the Contribution margin?_____________________ What would be the net income/loss? ________________________ Reconcile the variable costing and absorption costing net income figures. The P. Talbot Company was organized just one month ago. The company manufacturesand sells a unique product that has been quickly accepted by consumers. The results ofthe company's first month of operations are shown below (absorption costing basis):Sales (10,000 units @ $20)$200,000140,00060,00045,000$15,000Less Cost of Goods SoldGross MarginLess Selling and Administrative expensesNet IncomeVariable selling and administrative expenses are $2 per unit. The company produced 12,000units during the month. Variable manufacturing costs total $10 per unit, and fixedmanufacturing overhead costs total $48,000 per month.a) What is the ending inventory value using full-absorption costing?b) Using a Variable costing basis Income statement:What would be the Contribution margin?What would be the net income/loss?c) Reconcile the variable costing and absorption costing net income figures.

Under absorption costing system, all the manufacturing costs (variable and fixed) form a part of the…

The P. Talbot Company was organized just one month ago. The company manufactures and sells a unique product that has been quickly accepted by consumers. The results of the company’s first month of operations are shown below (absorption costing basis): Sales (10,000 units @ $20) $200,000 Less Cost of Goods Sold 140,000 Gross Margin 60,000 Less Selling and Administrative expenses 45,000 Net Income $15,000 Variable selling and administrative expenses are $2 per unit. The company produced 12,000 units during the month. Variable manufacturing costs total $10 per unit, and fixed manufacturing overhead costs total $48,000 per month. What is the ending inventory value using full-absorption costing?_ Using a Variable costing basis Income statement: What would be the Contribution margin?_ What would be the net income/loss? ____________ Reconcile the variable costing and absorption costing net income figures.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 16E

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Sales (10,000 units @ $20) $200,000

Less Cost of Goods Sold 140,000

Gross Margin 60,000

Less Selling and Administrative expenses 45,000

Net Income $15,000

Variable selling and administrative expenses are $2 per unit. The company produced 12,000 units during the month. Variable manufacturing costs total $10 per unit, and fixed manufacturing overhead costs total $48,000 per month.

What is the ending inventory value using full-absorption costing?_________

Using a Variable costing basis Income statement:

What would be the Contribution margin?_____________________

What would be the net income/loss? ________________________

Reconcile the variable costing and absorption costing net income figures.

The P. Talbot Company was organized just one month ago. The company manufactures
and sells a unique product that has been quickly accepted by consumers. The results of
the company's first month of operations are shown below (absorption costing basis):
Sales (10,000 units @ $20)
$200,000
140,000
60,000
45,000
$15,000
Less Cost of Goods Sold
Gross Margin
Less Selling and Administrative expenses
Net Income
Variable selling and administrative expenses are $2 per unit. The company produced 12,000
units during the month. Variable manufacturing costs total $10 per unit, and fixed
manufacturing overhead costs total $48,000 per month.
a) What is the ending inventory value using full-absorption costing?
b) Using a Variable costing basis Income statement:
What would be the Contribution margin?
What would be the net income/loss?
c) Reconcile the variable costing and absorption costing net income figures.

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