Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 7, Problem 6E
To determine
To show: The Income Statement ass per Absorption costing
To determine
The unit product cost under variable costing
To determine
To prepare: The income statement under Variable costing
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
I. CDE Corporation produces a single product and has the following cost structure:
Number of units produced each year 7,000
Variable costs per unit:
Direct materials P 51
Direct labor P 12
Variable manufacturing overhead P 2
Variable selling and administrative expense P 5
Fixed costs per year:
Fixed manufacturing overhead P 441,000
Fixed selling and administrative expense P 112,000
Required:
1. Compute the product cost per unit under:
a. Absorption costing
b. Varibale Costing
2. If the company produced 6,000 units, what is the product cost per unit under absorption costing.
subject:accounting
ACCT 203 produces and sells lighting fixtures. An entry light has a total cost of $180 per unit, of which $100 is product cost and $80 is selling and administrative expenses. In addition, the total cost of $180 is made up of $110 variable cost and $70 fixed cost. The desired profit is $45 per unit. Determine the markup percentage on product cost.
Variable and Absorption Costing Unit Product Costs and Income Statements
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations:
During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company’s product is $50 per unit.
Required:
1. Assume that the company uses absorption costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.
2. Assume that the company uses variable costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.
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...
Knowledge Booster
Similar questions
- Product cost concept of product pricing Based on the data presented in Exercise 12-15, assume that Willis Products Inc. uses the product cost concept of applying the cost-plus approach to product pricing. a.Determine the total manufacturing costs and the cost amount per unit for the production and sale of 200,000 units. b.Determine the product cost markup percentage per unit. Round to two decimal place. c.Determine the selling price per unit. Round to the nearest dollar.arrow_forwardThe following product Costs are available for Haworth Company on the production of chairs: direct materials, $15,500; direct labor, $22.000; manufacturing overhead, $16.500; selling expenses, $6,900; and administrative expenses, $15,200. What are the prime costs? What are the conversion costs? What is the total product cost? What is the total period cost? If 7,750 equivalent units are produced, what is the equivalent material cost per unit? If 22,000 equivalent units are produced, what is the equivalent conversion cost per unit?arrow_forwardThe following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?arrow_forward
- Q. No. 2: Martinez Company's relevant range of production is 15,000 units to 25,000 units. When it produces and sells 17,500 units, its average costs per unit are as follows: Average Cost per Unit ($) Selling Price Direct materials Direct labor. Variable manufacturing overhead Fixed manufacturing overhead. Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense 50 10 6. 5. 3 2 2.5 Required: a. For financial accounting purposes, what is the total amount of product costs incurred to make 17,500 units? b. If 18,500 units are produced and sold, calculate the variable cost per unit and total for units produced and sold? c. If 19,000 units are produced, what is the average fixed manufacturing cost per unit produced? d. if 19,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis?arrow_forwardDefine and classify variable, faed, and mixed costs, E22.1 (LO 1) Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production. Costs Incurred Production in Units 5,000 10,000 Total Cost/ Total Cost/ Production Costs Cost Unit Cost Unit Direct materials $8,000 9,500 $1.60 $16.000 $1.60 19,000 3,300 Direct labor 1.90 1.90 2,000 4,000 Utilities 0.40 0.33 Rent 0.80 4,000 1.400 0.40 Maintenance 800 0.16 0.14 Supervisory salaries 1,000 0.20 1,000 0.10 Instructions a. Define the terms variable costs, fixed costs, and mixed costs. b. Classify cach cost above as either variable, fixed, or mixed.arrow_forwardt 0 ences Mc Graw Hill Required information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $75 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 46,000 units and sold 42,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense Break even point $ 25 $ 20 The company sold 31,000 units in the East region and 11,000 units in the West region. It determined that $200,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $38,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing…arrow_forward
- Benolt Company produces three products, A, B. and C. Data concerning the three products follow (per unit): Product A Selling price Less: Variable expenses: Direct materials Other variable expenses Total variable expenses Contribution nargin $132.00 $92.48 $115.50 14.85 66.ee se.85 39.6e 24.75 44.55 69.30 39.60 79.20 $ 52.80 $23.10 $ 34.65 CH ratio 40 251 30x Demand for the company's products Is very strong. with far more orders each month than the company has raw materials avallable to produce. The same material is used in each product. The materlal costs $4.95 per klogram with a maximum of 8,230 kilograms avallable each month. Required: Calculate the contribution per constralned resource and prioritize the orders for products A, B and C. (Round your answers to 2 decimal places.) A Contribution per hour of labour used Priority Second Third Firstarrow_forwardok int erences Required information [The following information applies to the questions displayed below.] 1 T Mc Graw Hill Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: A Q N Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Total manufacturing overhead cost Manufacturing overhead per unit 11. If 8,000 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places.) @ 2 W S X H 7316 command #3 E D 3 C $ 4 - M 2023-01...0.40 PM 2023-01...2.52 PM 2022-12.6.4 ( - C 9 K O ) LO < H L 4) I' P V CO - CA { I + [ E command optio:arrow_forwardRequired information Case 4-29 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO4-1, LO4-2] [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 570,000 $ 110,000 During its first year of operations, O'Brien produced 100,000 units and sold 74,000 units. During its second year of operations, it produced 76,000 units and sold 97,000 units. In its third year, O'Brien produced 81,000 units and sold 76,000 units. The selling price of the company's product is $77 per unit. Case 4-29 Part-1 (Algo) Required: 1. Assume the company uses variable costing and a FIFO inventory…arrow_forward
- Different Costs for Different Purposes, Cost-Volume-Profit-Relationships Hixson Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production is 20,000 units to 30,000 units. When Hixson produces and sells 25,000 units, its unit costs are as follows: Required: 1. For financial accounting purposes, what is the total amount of product costs incurred to make 25,000 units? What is the total amount of period costs incurred to sell 25,000 units? 2. If 24,000 units are produced, what is the variable manufacturing cost per unit produced? What is the average fixed manufacturing cost per unit produced? 3. If 26,000 units are produced, what is the variable manufacturing cost per unit produced? What is the average fixed manufacturing cost per unit produced? 4. If 27,000 units are produced, what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production? 5.…arrow_forwardd ok rint erences Mc Graw Hill Required information [The following information applies to the questions displayed below.] Martinez Company's relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows: 2 W S 12. If 12,500 units are produced, what is the total amount of manufacturing overhead cost incurred to support this level of production? What is this total amount expressed on a per unit basis? (Round your "per unit" answer to 2 decimal places.) Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense Total manufacturing overhead cost Manufacturing overhead per unit H mmand X 7816 #3 E D C $ 4 R F F 1 2023-01...0.40 PM 2023-01...2.52 PM 2022-12...6.4 wong < M ( - O 9 A K O ) V -O 0 I H L I' P command - { I [ optiarrow_forwardRequired information [The following information applies to the questions displayed below] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): $ 10,000 5,500 4,500 2,250 Sales Variable expenses Contribution margin Fixed expenses Net operating income 2,250 2. What is the contribution margin ratio? Contribution margin ratioarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning