Variable selling and administration expense refer to those expenses which are incurred for developing or increasing sales of the manufacturing units. These are very much necessary for generating sales. These expenses are such as salary to administration staff, incentives to sales managers or sales staff, etc. To determine: Variable selling and administration expenses, Fixed manufacturing overheads , and Fixed selling and administrative expenses.

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Chapter 22, Problem 7PSA

a.

To determine

Introduction: Variable selling and administration expense refer to those expenses which are incurred for developing or increasing sales of the manufacturing units. These are very much necessary for generating sales. These expenses are such as salary to administration staff, incentives to sales managers or sales staff, etc.

To determine: Variable selling and administration expenses, Fixed manufacturing overheads, and Fixed selling and administrative expenses.

b.

To determine

Introduction: An income statement refers to a statement of accounts that shows the financial performance of the entity for a particular time period i.e. financial year. The income statement comprises Revenues generated by the entity less all expenses which show the net earnings of the company.

To calculate: The maximum advertising costs that the company can incur while earning the same profit.

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ABC began operations at the beginning of the current year and keeps absorption-cost accounting records. There is no beginning finished-goods inventory. ABC achieved its planned production level for the year. The company's fixed manufacturing overhead totaled RM188,000, and the firm paid a 10% commission based on gross sales (RM) to its sales force. On the company's profit or loss statement and end-of-year statement of financial position, the following information was included: Profit or Loss Data: RM Sales revenues (35,000 units @ RM24) 840,000 Gross Margin 210,000 Total sales and administrative expenses 160,000 Financial Position Data: Ending finished-goods inventory (12,000 units) 216,0000 Compute ABC's cost of goods sold using absorption costing.

ABC began operations at the beginning of the current year and keeps absorption-cost accounting records. There is no beginning finished-goods inventory. ABC achieved its planned production level for the year. The company's fixed manufacturing overhead totaled RM188,000, and the firm paid a 10% commission based on gross sales (RM) to its sales force. On the company's profit or loss statement and end-of-year statement of financial position, the following information was included: Profit or Loss Data: RM Sales revenues (35,000 units @ RM24) 840,000 Gross Margin 210,000 Total sales and administrative expenses 160,000 Financial Position Data: Ending finished-goods inventory (12,000 units) 216,0000 Compute the number of units that ABC planned to produce during the year.

Midlands Inc. had a bad year in 2021. For the first time in its history, it operated at a loss. The company’s income statement showed the following results from selling 80,000 units of product: net sales $2,000,000; total costs and expenses $2,235,000; and net loss $235,000. Costs and expenses consisted of the following. Total Variable Fixed Cost of goods sold $1,568,000 $1,050,000 $518,000 Selling expenses 517,000 92,000 425,000 Administrative expenses 150,000 58,000 92,000 $2,235,000 $1,200,000 $1,035,000 Management is considering the following independent alternatives for 2022. 1. Increase unit selling price 25% with no change in costs and expenses. 2. Change the compensation of salespersons from fixed annual salaries totaling $200,000 to total salaries of $40,000 plus a 5% commission on net sales. 3. Purchase new high-tech factory machinery that will change the proportion between variable and fixed cost of goods sold to 50:50