Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the yearfollows:Sales (41,000 units $41.10 per unit)Cost of goods sold (41,000 units $21 per unit)Gross marginSelling and administrative expensesNet operating incomeWhitman CompanyIncome StatementThe company's selling and administrative expenses consist of $307,500 per year in fixed expenses and $4 per unit sold in variableexpenses. The $21 unit product cost given above is computed as follows:Direct materialsDirect laborVariable manufacturing overheadFixed manufacturing overhead ($240,000+ 48,000 units)Absorption costing unit product costRequired 1 Required 2Required:1. Redo the company's income statement in the contribution format using variable costing.2. Reconcile any difference between the net operating income on your variable costing income statement and the net operatingincome on the absorption costing income statement above.Complete this question by entering your answers in the tabs below.SalesVariable expenses:Redo the company's income statement in the contribution format using variable costing.Whitman CompanyVariable Coating Income StatementVariable cast of goods soldVariable selling and administrativeContribution margin$1,685,100861,000824,188471,508$ 352,600Fixed expenses.Fixed manufacturing overheadFixed selling and administrative expenseNet operating income35$ 21CYRequired 2 >

The contribution margin is calculated as the difference between the sales and variable costs. The…

Answered: Whitman Company has just completed its…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A B C Sales $ 330,000 $ 480,000 $ 500,000 Cost of goods sold (242,000 ) (184,000 ) (190,000 ) Sales commissions (30,000 ) (44,000 ) (44,000 ) Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000 ) (92,000 ) (92,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income (loss) $ (40,000 ) $ 140,000 $ 174,000 Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…
Nato Company was organized a year ago. The results of the company's first year of operations using the absorption costing method follow: Sales (40,000 units @P33.75), P 1,350,000; Cost of goods manufactured (50,000 units @ 21), p 1,050,000; Ending inventory (10,000 units @ 21), P_210,000; Selling & administrative expenses, P420,000; Net Operating income, P90,000. The company's selling and administrative expenses consists of P300,000 per year in fixed expenses and P3.00 per unit sold in variable expenses. The product cost of P21 is computed as follows: Direct materials - P10.00; Direct labor - P4.00; Variable manufacturing overhead - P2.00; Fixed manufacturing overhead (P250,000/50,000 units) –P5.00. Compute for the operating income under variable costing.
Darby Company, operating at full capacity, sold 129,600 units at a price of $123 per unit during the current year. Its income statement is as follows: Sales $15,940,800 Cost of goods sold 5,658,000 Gross profit $10,282,800 Expenses: Selling expenses $2,829,000 Administrative expenses 1,681,000 Total expenses 4,510,000 Income from operations $5,772,800 The division of costs between variable and fixed is as follows: Variable Fixed Cost of goods sold 60% 40% Selling expenses 50% 50% Administrative expenses 30% 70% Management is considering a plant expansion program for the following year that will permit an increase of $1,476,000 in yearly sales. The expansion will increase fixed costs by $196,800, but will not affect the relationship between sales and variable costs. Required: 1. Determine the total variable costs and the total fixed costs for the current year. Total variable costs $fill in the blank 1…
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Kenzi, a manufacturer of kayaks, began operations this year. During this year, the company produced 1,000 kayaks and sold 750 at a price of $1,000 each. At year-end, the company reported the following income statement information using absorption costing. Sales (750 x $1,000) Cost of goods sold (750 x $425) Gross profit Selling and administrative expenses Income Additional Information $ 750,000 318,750 431,250 240,000 $ 191,250 a. Product cost per kayak under absorption costing totals $425, which consists of $325 in direct materials, direct labor, and variable overhead costs and $100 in fixed overhead cost. Fixed overhead of $100 per unit is based on $100,000 of fixed overhead per year divided by 1,000 kayaks produced. b. The $240,000 in selling and administrative expenses consists of $95,000 that is variable and $145,000 that is fixed. Prepare an income statement for the current year under variable costing. Income KENZI Income Statement (Variable Costing)
Hancock Company manufactures and sells two lines of furniture, case goods and upholstery, During the most recent accounting period, the Case Goods and Upholstery Divisions sold 17,400 and 2,360 units, respectively. The company's most recent financial statements are shown below. Sales Less cost of goods sold: Unit-level production cost Depreciation, production equipment Gross margin Less operating expenses: Case Goods Upholstery $1,852,000 $472,000 1,156,000 276,000 $420,000 283,200 70,800 $118,000 Unit-level selling and administrative costs Corporate-level facility expenses (fixed) Net income (loss) If unit sales for both divisions increased 10% the company would report which of the following? 69,600 64,000 $286,400 59,000 64,000 $(5,000)
Zachary Company operates three segments Income statements for the segments imply that profitability could be improved if Segment A were eliminated. ZACHARY COMPANY Income Statements for Year 2 Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) Required a. Prepare a schedule of relevant sales and costs for Segment A A $ 168,000 (126,000) (20,000) 22,000 (34,000) (6,000) B $ 235,000 (79,000) (32,000) 124,000 (51,000) (19,000) $ (18,000) $ 54,000 $ 253,000 (82,000) (28,000) 143,000 (34,000) $ 109,000 b. Prepare comparative income statements for the company as a whole under two alternatives (1) the retention of Segment A and (2) the elimination of Segment A Complete this question by entering your answers in the tabs below.. Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Revenue and Cost…
Nato Company was organized a year ago. The results of the company's first year of operations using the absorption costing method follow: Sales (40,000 units @ Р33.75), Р (50,000 units @ 21), P 1,050,000; Ending inventory (10,000 units @ 21), P_210,000; Selling & administrative expenses, P420,000; Net Operating income, P90,000. The company's selling and administrative expenses consists of P300,000 per year in fixed expenses and P3.00 per unit sold in variable expenses. The product cost of P21 is computed as follows: Direct materials - labor – P4.00; Variable manufacturing overhead – P2.00; Fixed manufacturing overhead (P250,000/50,000 units) – P5.00. Compute for the operating income under variable costing. 1,350,000; Cost of goods manufactured P10.00; Direct
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (40,000 units x $44.60 per unit) Cost of goods sold (40,000 units x $22 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,784,000 880,000 904,000 460,000 $ 444,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($180,000 + 45,000 units) Absorption costing unit product cost Required: $ 10 5 3 4 $ 22 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…
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Hi-Tek Manufacturing, Incorporated, makes two types of industrial component parts-the B300 and the T500. An absorption costing income statement for the most recent period is shown: Hi-Tek Manufacturing Incorporated Income Statement Sales Cost of goods sold Selling and administrative expenses Gross margin Net operating loss $ 1,651,800 1,211,394 440,406 640,000 $ (199,594) Hi-Tek produced and sold 60,200 units of B300 at a price of $19 per unit and 12,700 units of T500 at a price of $40 per unit. The company's traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company's two product lines is shown below: Direct materials Direct labor Manufacturing overhead Cost of goods sold B300 $ 400,700 $ 162,000 $ 120,200 $ 42,000 T500 Total $ 562,700 162,200 486,494 $ 1,211,394 The company has created an activity-based costing system to evaluate the profitability…
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (42,000 units x $43.60 per unit) Cost of goods sold (42,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,831, 200 966,000 865,200 483,000 $ 382,200 The company's selling and administrative expenses consist of $315,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Direct materials. Direct labor $ 10 4 Variable manufacturing overhead 3 Fixed manufacturing overhead ($276,000 46,000 units) 6 Absorption costing unit product cost $ 23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…

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