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 2E
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:
- a. Prepare an income statement according to the absorption costing concept.
- b. Prepare an income statement according to the variable costing concept.
- c. What is the reason for the difference in the amount of operating income reported in (a) and (b)?
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Gallatin County Motors Inc. assembles and sells snowmobile engines.The company began operations on July 1 and operated at 100% ofcapacity during the first month. The attached data summarize theresults for July:
a. Prepare an income statement according to the absorptioncosting concept.b. Prepare an income statement according to the variable costingconcept.c. What is the reason for the difference in the amount of operatingincome reported in (a) and (b)?
Morning Company reports the following information for March:
E (Click the icon to view the data.)
Read the requirements.
Requirement 1. Calculate the gross profit and operating income for March using absorption costing.
Morning Company
Income Statement (Absorption Costing)
For the Month Ended March 31
Data Table
Net Sales Revenue
67,850
Variable Cost of Goods Solłd
19,300
Operating income
Fixed Cost of Goods Sold
8,400
Variable Selfing and Administrative Costs
16,500
Requirements
Fixed Selling and Administrative Costs
3,800
1. Calculate the gross profit and operating income for March using absorption
costing.
2. Calculate the contribution margin and operating income for March using
variable costing.
Print
Done
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 (19,500 units)
$2,925,000
Production costs (25,000 units):
Direct materials
$1,387,500
Direct labor
665,000
Variable factory overhead
332,500
Fixed factory overhead
222,500
2,607,500
Selling and administrative expenses:
Variable selling and administrative expenses
$404,200
Fixed selling and administrative expenses
156,500
560,700
If required, round interim per-unit calculations to the nearest cent.
a. Prepare an income statement according to the absorption costing concept.
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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