Question

1 Addison, Inc. makes a single product, an indoor fireplace, and has provided data from last year of operations. The Controller has asked you to compare income statements if the company used the variable costing approach vs. the absorption costing report. Use the information included in the Excel Simulation and the Excel functions described below to complete the task. .Cell Reference: Allows you to refer to data from another cell in the worksheet. From the Excel Simulation below, if in a blank cell, "-83" 15 points was entered, the formula would output the result from cell B3, or 420 in this example Basic Math functions: Allows you to use the basic math symbols to perform mathematical functions. You can use th e folo ma keys.. (plus sign to add, (minus sign to subtract), (asterisk sign to multiply), and /(forward slash to divide From the Excel Simulation below, if in a blank cell “-B15+B16" was entered, the formula would add the values from those cells and output the result, or 9,500 in this example If using the other math symbols the result would output an appropriate answer for its function. .SUM function: Allows you to refer to multiple cells and adds all the values. You can add individual cell references or ranges to utilize this 5 eBook function. From the Excel Simulation below, if in a blank cell-SUM(B6,B7,B8)" was entered, the formula would output the result of adding those three separate cells, or 215 in this example similarly, if in a blank ceiï M(B6:38 was entered, the formula would ouput he same result of adding those cells, except they are expressed as a range in the formula, and the result would be 215 in this example.

Answer 1

Ans.(1)	Determination of Unit Product Cost (Under Variable Costing):
	Particulars			Amt.($)
	Direct Material			135
	Direct Labor			43
	Variable Manuf. Overhead			37
	Cost per unit			$        215
	Addison, Inc.
	Income Statement
	Particulars				Amt.($)	Amt.($)
	Sales (4,500 x $83)					$ 1,890,000
	Variable Cost of Goods sold:
	Beginning Inventory				-
	Production cost (5,000 units x $215)				$ 1,075,000
	Cost of Goods available for sale				1,075,000
	Ending Inventory (500 units x $215)				107,500	967,500
	Gross contribution margin					922,500
	Variable Selling and administrative expenses(4,500 units x $45)					202,500
	Contribution Margin					720,000
	Less: Fixed cost
	Manufacturing Overhead				210,000
	Selling and administrative				190,000	400,000
	Net Operating Income					$     320,000

Ans.(2)	Determination of Unit Product Cost (Under Absorption Costing):
	Particulars			Amt.($)
	Direct Material			135
	Direct Labor			43
	Variable Manuf. Overhead			37
	Fixed Manuf. Overhead ($210,000 / 5,000)			42
	Cost per unit			$              257
	Addison, Inc.
	Income Statement
	Particulars				Amt.($)	Amt.($)
	Sales (4,500 x $83)					$   1,890,000
	Cost of Goods sold
	Beginning Inventory
	Production cost (5,000 units x $257)				$   1,285,000
	Cost of Goods available for sale				1,285,000
	Ending Inventory (500 units x $257)				128,500	1,156,500
	Gross Profit					733,500
	Less: Selling and administrative expenses:
	Variable (4,500 units x $45)				202,500
	Fixed				190,000	392,500
	Net Operating Income					$       341,000