Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 7, Problem 1BE
Variable costing
Marley Company has the following information for March:
Determine (A) the manufacturing margin, (B) the contribution margin, and (C) operating income for Marley Company for the month of March.
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Using the least-squares method of analyzing costs, answer the following questions and show computations to support your answers. a. What is the estimated variable portion of maintenance costs per labor hour?
B.What is the estimated fixed maintenance cost each month?
C.Formulate the regression equation
D.If it is estimated that 600 labor hours will be used in July, what is the expected total power cost for July?
The 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 Statement
Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month.
The following data summarize the results for July:
Sales (13,500 units)
$1,620,000
Production costs (17,000 units):
Direct materials
$754,800
Direct labor
362,100
Variable factory overhead
181,900
Fixed factory overhead
120,700
1,419,500
Selling and administrative expenses:
Variable selling and administrative expenses
$220,000
Fixed selling and administrative expenses
85,200
305,200
If required, round interim per-unit calculations to the nearest cent.
a. Prepare an income statement according to the absorption costing concept.
Gallatin County Motors Inc.
Absorption Costing Income
Statement
For the Month Ended July 31
$
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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- Summarized data for Backdraft Co. for its first year of operations are as follows: A. Prepare an income statement under absorption costing B. Prepare an income statement under variable costingarrow_forwardOn October 31, the end of the first month of operations, Maryville Equipment Company prepared the following income statement, based on the variable costing concept: Prepare an income statement under absorption costing.arrow_forwardIncome Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.arrow_forward
- Variable-Costing Income Statement Refer to the data for Osterman Company on the previous page. Required: 1. Calculate the cost of goods sold under variable costing. 2. Prepare an income statement using variable costing. Use the following information for Brief Exercises 3-23 and 3-24: During the most recent year, Osterman Company had the following data:arrow_forwardMethod of Least Squares, Predicting Cost for Different Time Periods from the One Used to Develop a Cost Formula Refer to the information for Farnsworth Company on the previous page. However, assume that Tracy has used the method of least squares on the receiving data and has gotten the following results: Required: 1. Using the results from the method of least squares, prepare a cost formula for the receiving activity. 2. Using the formula from Requirement 1, what is the predicted cost of receiving for a month in which 1,450 receiving orders are processed? (Note: Round your answer to the nearest dollar.) 3. Prepare a cost formula for the receiving activity for a quarter. Based on this formula, what is the predicted cost of receiving for a quarter in which 4,650 receiving orders are anticipated? Prepare a cost formula for the receiving activity for a year. Based on this formula, what is the predicted cost of receiving for a year in which 18,000 receiving orders are anticipated?arrow_forwardPlymouth Company reports the following information for June.Calculate the gross profit and operating income for June using absorption costing .arrow_forward
- Calculate the unit product cost for the month under absorption costing methodarrow_forwardRequired: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes.arrow_forwardUsing high-low method, what is the cost formula for estimating costs?arrow_forward
- Income Statements under Absorption Costing and Variable Costing Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: Sales (17,000 units) Production costs (22,000 units): Direct materials Direct labor Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses $1,302,400 624,800 312,400 209,000 2,448,600 $379,500 146,900 $2,720,000 If required, round interim per-unit calculations to the nearest cent. 526,400arrow_forwardVariable Costing Income Statement 2. Prepare an estimated income statement in variable costing form for June for solvent, assuming that production continues during the month. Income Statement Instructions 1 2 (Label) 3 4 5 6 7 8 9 10 (Label) 11 12 13 14 Celecia Industries Inc. Estimated Income Statement-Variable Costing-Solvent (Label)arrow_forwardwhat is the net operating income for the month under variable costing?arrow_forward
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