Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 11, Problem 13E
Prepare an income statement using the contribution margin approach
AJ Manufacturing Company incurred $50,000 of fixed product cost and $40,000 of variable product cost during its first year of operation. Also during its first year, AJ incurred $16,000 of fixed and $13,000 of variable selling and administrative costs. The company sold all of the units it produced for $160,000.
Required
- a. Prepare an income statement using the format required by generally accepted accounting principles (GAAP).
- b. Prepare an income statement using the contribution margin approach.
- c. Explain why both statements have the same amount of net income.
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AJ Manufacturing Company incurred $50,500 of fixed product cost and $40.400 of variable product cost during its first year of
operation. Also during its first year, AJ incurred $16,150 of fixed and $13,100 of variable selling and administrative costs. The company
sold all of the units it produced for $162,000.
Required
a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).
b. Prepare an income statement using the contribution margin approach.
Complete this question by entering your answers in the tabs below.
Required A
Required B
Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).
AJ MANUFACTURING COMPANY
Income Statement
Required B >
Mc
Graw
Hill
AJ Manufacturing Company Incurred $55,500 of fixed product cost and $44,400 of variable product cost during its first year of
operation. Also during its first year, AJ incurred $17.650 of fixed and $14.100 of variable selling and administrative costs. The company
sold all of the units it produced for $182.000.
Required
a. Prepare an income statement using the format required by generally accepted accounting Principles (GAAP)
b. Prepare an income statement using the contribution margin approach.
Complete this question by entering your answers in the tabs below.
Required A Required B
Prepare an income statement using the format required by generally accepted accounting Principles (GAAP).
AJ MANUFACTURING COMPANY
Income Statement
Direct labour
Sales
Selling expenses
Raw (direct) materials on hand:
January 1
December 31
General and administrative expenses
Finished goods:
January 1
Work-in-process:
January 1
December 31
Direct materials purchases
Depreciation: factory
Indirect labour
Indirect materials used
Marketing promotions
Factory taxes
Utilities
Courier costs (office)
Miscellaneous plant overhead
Plant repairs and maintenance
Customer service costs
Fire insurance: factory equipment
Materials handling costs
$ 30,000
400,000
50,000
8,000
4,000
18,000
25,000
19,000
18,000
47,000
20,000
3,000
7,000
1,500
11,000
20,000
900
4,000
9,000
3,000
3,000
8,000
Chapter 11 Solutions
Survey Of Accounting
Ch. 11 - 1.Define fixed cost and variable cost and give an...Ch. 11 - Prob. 2QCh. 11 - 3.Define the term operating leverage and explain...Ch. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - 6.If volume is increasing, would a company benefit...Ch. 11 - Explain the risk and rewards to a company that...Ch. 11 - 9.Are companies with predominately fixed cost...Ch. 11 - 10.How is the relevant range of activity related...Ch. 11 - Which cost structure has the greater risk?...
Ch. 11 - 14.The president of Bright Corporation tells you...Ch. 11 - Prob. 12QCh. 11 - Prob. 13QCh. 11 - Prob. 14QCh. 11 - Prob. 15QCh. 11 - Prob. 16QCh. 11 - Prob. 17QCh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Exercise 2-4A Determining total variable cost The...Ch. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prepare an income statement using the contribution...Ch. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - Prob. 20ECh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Problem 2-19A Context-sensitive nature of cost...Ch. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Prob. 27PCh. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Prob. 1ATCCh. 11 - Prob. 2ATCCh. 11 - Prob. 3ATCCh. 11 - Prob. 4ATCCh. 11 - Prob. 5ATC
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