Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 7, Problem 18E
Variable costing income statement for a service company
The actual and planned data for Underwater University for the Fall term were as follows:
Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours.
- A. Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term.
- B. Prepare a contribution margin analysis report comparing planned with actual performance for the Fall term.
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Obj. 5, 6
EX 20-22 Variable costing income statement and contribution margin
analysis for a service company
n The actual and planned data for Underwater University for the Fall term were as follows:
Actual
Planned
Enrollment
4,500
4,125
Tuition per credit hour
$120
$135
Credit hours
60,450
43,200
Registration, records, and marketing cost per enrolled student
$275
$275
Instructional costs per credit hour
Depreciation on classrooms and equipment
$64
$60
$825,600
$825,600
Variable Costing Income Statement for a Service Company
The actual and planned data for Underwater University for
the Fall term were as follows:
Enrollment
Tuition per credit hour
Credit hours
Registration, records, and marketing costs per
enrolled student
Revenue
Variable costs:
Registration, records, and marketing costs $
Instructional costs
Total variable costs
Instructional costs per credi ur
Depreciation on classrooms and equipment
Registration, records, and marketing costs vary by the
number of enrolled students, while instructional costs vary
by the number of credit hours. Depreciation is a fixed cost.
Contribution margin
Depreciation on classrooms and equipment
Operating income
$
Actual
$
4,500
Prepare a variable costing income statement showing the
contribution margin and operating income for the Fall term.
Underwater University
Variable Costing Income Statement
For the Fall Term
$
$120
60,450
$275
$64
$825,600
Variable
Costing Income Statement for a Service Company
The actual and planned data for Broadwater Institute & Technical School for the Fall term were as follows:
Actual
Planned
Enrollment
Tuition per credit hour
Credit hours
Line Item Description
Revenue
Variable costs
Registration, records, and marketing costs
Registration, records, and marketing costs per enrolled student
Instructional costs per credit hour
Depreciation on classrooms and equipment
$1,875,000
$1,875,000
Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost.
Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term
Broadwater Institute & Technical School
Variable Costing Income Statement
For the Fall Term
Instructional costs
Total variable costs
Contribution margin
Depreciation on classrooms and equipment
Operating income
Amount
9.200.000 ✓…
Chapter 7 Solutions
Managerial Accounting
Ch. 7 - What types of costs are customarily included in...Ch. 7 - Which type of manufacturing cost (direct...Ch. 7 - Which of the following costs would be included in...Ch. 7 - In the variable costing income statement, how are...Ch. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Discuss how financial data prepared on the basis...Ch. 7 - Prob. 8DQCh. 7 - Explain why rewarding sales personnel on the basis...Ch. 7 - Explain why service companies use different...
Ch. 7 - Variable costing Marley Company has the following...Ch. 7 - Prob. 2BECh. 7 - Variable costingsales exceed production The...Ch. 7 - Prob. 4BECh. 7 - Contribution margin by segment The following...Ch. 7 - At the end of the first year of operations, 21,500...Ch. 7 - Gallatin County Motors Inc. assembles and sells...Ch. 7 - Fresno Industries Inc. manufactures and sells...Ch. 7 - On March 31, the end of the first month of...Ch. 7 - On April 30, the end of the first month of...Ch. 7 - On October 31, the end of the first month of...Ch. 7 - The following data were adapted from a recent...Ch. 7 - Estimated income statements, using absorption and...Ch. 7 - The following data were adapted from a recent...Ch. 7 - Prob. 10ECh. 7 - Explain why service companies use different...Ch. 7 - Galaxy Sports Inc. manufactures and sells two...Ch. 7 - Prob. 13ECh. 7 - Sales territory and salesperson profitability...Ch. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Variable costing income statement for a service...Ch. 7 - Variable costing income statement for a service...Ch. 7 - Prob. 1PACh. 7 - The demand for solvent, one of numerous products...Ch. 7 - During the first month of operations ended May 31,...Ch. 7 - Salespersons report and analysis Walthman...Ch. 7 - Segment variable costing income statement and...Ch. 7 - Absorption and variable costing income statements...Ch. 7 - Income statements under absorption costing and...Ch. 7 - Absorption and variable costing income statements...Ch. 7 - Prob. 4PBCh. 7 - Variable costing income statement and effect on...Ch. 7 - Prob. 1MADCh. 7 - Prob. 2MADCh. 7 - Prob. 3MADCh. 7 - Segment disclosure by Apple Inc. (AAPL) provides...Ch. 7 - Prob. 1TIFCh. 7 - Inventory effects under absorption costing BendOR,...Ch. 7 - Communication Bon Jager Inc. manufactures and...Ch. 7 - Prob. 1CMACh. 7 - Chassen Company, a cracker and cookie...Ch. 7 - Prob. 3CMACh. 7 - Bethany Company has just completed the first month...
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- Variable Costing Income Statement for a Service Company The actual and planned data for Broadwater Institute & Technical School for the Fall term were as follows: Actual Enrollment Tuition per credit hour Credit hours Line Item Description Revenue Variable costs: Registration, records, and marketing costs Instructional costs. Registration, records, and marketing costs per enrolled student Instructional costs per credit hour Depreciation on classrooms and equipment $1,875,000 Registration, records, and marketing costs vary by the number of enrolled students, while instructional costs vary by the number of credit hours. Depreciation is a fixed cost. Total variable costs Contribution margin Depreciation on classrooms and equipment Operating income 5,000 $115 80,000 $300 $45 Prepare a variable costing income statement showing the contribution margin and operating income for the Fall term. Broadwater Institute & Technical School Variable Costing Income Statement For the Fall Term Amount…arrow_forwardThe controller at Wesson Company's manufacturing plant has provided you with the following information for the first quarter's operations: Direct materials Fixed manufacturing overhead costs Sales price Variable manufacturing overhead Direct labor Fixed marketing and administrative costs Units produced and sold during the quarter Variable marketing and administrative costs Required: a. Prepare a gross margin income statement. b. Prepare a contribution margin income statement. Complete this question by entering your answers Required A Required B Prepare a contribution margin income statement. Contribution Margin Income Statementarrow_forwardWhich of the following will give you the most accurate allocation between a cost's fixed component and variable component? a. Examination of a students’ registration forms for miscellaneous fees and tuition fees b. Use of the least squares method to allocate the cost of electricity c. Dividing the total cost on the water bill among the different departments based on direct labor hours d. Dividing the total cost of the postpaid plan using the high-low methodarrow_forward
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