Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Chapter 7, Problem 12F15
To determine
Net operating income under Variable costing system and Absorption costing method:
Variable Costing is a costing method which comprises of only variable
Absorption Costing is different from variable costing. It comprises of direct materials, direct labors and both variable and fixed manufacturing overhead. Thus in absorption costing all of the manufacturing costs is absorbed by the units produced.
.
Operating income we get by reducing the fixed expenses from the contribution margin.
If the company produces 5000 fewer units than it sells in the second year of operations, will absorption costing net operating income be higher or lower than variable costing net operating income in year 2.
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Diego Company manufactures one product that is sold for $77 per unit in two geographic regions-the East and West
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Harris Company manufactures and sells a single product. A partially completed schedule of the company's total
costs and costs per unit over the relevant range of 55,000 to 95,000 units is given below:
Required:
1. Complete the schedule of the company's total costs and costs per unit as given in the relevant tab below.
2. Assume that the company produces and sells 85,000 units during the year at a selling price of $7.40 per unit.
Prepare a contribution format income statement for the year.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Complete the schedule of the company's total costs and costs per unit as given in the relevant tab below. (Round the per
variable cost and fixed cost to 2 decimal places.)
Total cost:
Variable cost
Fixed cost
Total cost
Cost per unit:
Variable cost
Fixed cost
Total cost per unit
55,000 Units
Produced and
Sold
$
$
132,000
300,000
432,000
75,000 Units
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Sold
95,000 Units
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Chapter 7 Solutions
Introduction To Managerial Accounting
Ch. 7 - What is the difference between absorption costing...Ch. 7 - Are selling and administrative expenses treated as...Ch. 7 - Explain how fixed manufacturing overhead costs are...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - Prob. 6QCh. 7 - If the units produced exceed the units sold, which...Ch. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - How does Lean Production reduce or eliminate the...
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Distinguish between a traceable fixed cost and a...Ch. 7 - Explain how the contribution margin differs from...Ch. 7 - Why aren’t common fixed costs allocated to...Ch. 7 - How is it possible for a fixed cost that ¡s...Ch. 7 - Should a company allocate its common fixed costs...Ch. 7 - Prob. 1AECh. 7 - Prob. 2AECh. 7 - Prob. 3AECh. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 2F15Ch. 7 - Prob. 3F15Ch. 7 - Prob. 4F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 6F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 8F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 10F15Ch. 7 - Prob. 11F15Ch. 7 - Prob. 12F15Ch. 7 - Prob. 13F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 1ECh. 7 - Variable Costing Income Statement; Explanation of...Ch. 7 - Reconciliation of Absorption and Variable Costing...Ch. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Deducing Changes ¡n Inventories LO7—3 Parker...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Prob. 10ECh. 7 - Segmented Income Statement L07—4 Wingate Company,...Ch. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Variable Costing Unit Product Cost and Income...Ch. 7 - Absorption Costing Unit Product Cost and Income...Ch. 7 - Working with a Segmented Income Statement;...Ch. 7 - Prob. 17ECh. 7 - Prob. 18PCh. 7 - Variable Costing Income Statement; Reconciliation...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Segment Reporting and Decision-Making L07—4 Vulcan...Ch. 7 - Prob. 22PCh. 7 - Absorption and Variable Costing; Production...Ch. 7 - Companywide and Segment Break-Even Analysis;...Ch. 7 - Prepare and Interpret Income Statements; Changes...Ch. 7 - Prob. 26PCh. 7 - Variable and Absorption Costing Unit Product Costs...
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