Homework Answers
Balance sheet '2' is based on absorption costing.
In absorption costing, inventory is valued at full production cost including fixed manufacturing cost while variable costing values inventory at a total variable production cost. Hence inventory is valued at a higher value in absorption costing. Here inventory is valued higher in balance sheet 2 for January 1 and January 31. Hence balance sheet 2 is based on absorption costing.
During January, Production was less than sales for the month.
The balance sheet '1' is based on variable costing. In variable costing, inventory values at a total variable production cost. It does not include fixed manufacturing cost. hence, we can get variable cost per unit in this method without carried forward of fixed cost from last inventory period.
Here inventory value is lower at the month end. Hence it is clear that there was more sales than production.
For example, if variable cost per unit is $2. Then opening inventory= 9290 units & closing inventory = 4120 units. A difference of 5170 units. Hence sales is more than production.
Difference between variable costing income and absorbtion costing income for January=9160
If closing stock is lower than opening stock, then profit will be lower in absorption costing. Hence in this case, income is $9160 is lower for absorption costing than variable costing.
| Absorbtion costing | Variable costing | Difference | |
| Balance sheeet 2 | Balance sheeet 1 | ||
| Opening | 36670 | 18580 | 18090 |
| Closing | 17170 | 8240 | 8930 |
Difference between variable costing income and absorbtion costing income for January= difference in opening inventory of both costing - difference in closing inventory of both costing
=18090 - 8930
= 9160
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Exercise 17.31 Inventory data for a manufacturing firm for the month of January follows. One set...
Exercise 17.32 On your way to a meeting with the board of directors, your assistant provides...
Exercise 17.32 On your way to a meeting with the board of directors, your assistant provides you with last month's income statements-one based on the variable costing method and one based on the absorption costing method. Unfortunately, your assistant, who is new, has used absorption costing terminology for both income statements. Sales Cost of goods sold Other expenses Net income Income Statement 1 $8,598 $3,009 4,195 7,204 $1,394 Income Statement 2 $8,598 $4,041 3,069 7,110 $1,488 Which income statement is...
On your way to a meeting with the board of directors, your assistant provides you with...
On your way to a meeting with the board of directors, your assistant provides you with last month's income statements-one based on the variable costing method and one based on the absorption costing method. Unfortunately, your assistant, who is new, has used absorption costing terminology for both income statements. Sales Cost of goods sold Other expenses Net income Income Statement 1 $8,604 $3,013 4,152 7,165 $1,439 Income Statement 2 $8,604 $4,028 3,125 7,153 $1,451 Which income statement is based on...
The vice president of sales at Wildlife Corporation has received the income statement for January 2009....
The vice president of sales at Wildlife Corporation has received the income statement for January 2009. This statement, which was prepared on the basis of variable costing, is reproduced below. The firm has just adopted a variable costing system for internal reporting. Wildlife Corporation Income Statement For the Month of January 2009 $2,400,000 1,200,000 $1,200,000 Sales revenues Variable cost of goods sold Contribution margin Fixed costs Manufacturing Selling and administrative Operating income S600,000 400,000 1,000,000 $ 200,000 The controller attached...
Exercise 5-11 to Exercise 5-18 Tri Town Manufacturing produces snow shovels. The selling price per snow...
Exercise 5-11 to Exercise 5-18
Tri Town Manufacturing produces snow shovels. The selling price per
snow shovel is $28.00. There is no beginning inventory.
Costs involved in production are:
Direct material
$6.00
Direct labor
4.00
Variable manufacturing overhead
4.00
Total variable manufacturing costs per unit
$14.00
Fixed manufacturing overhead per year
$196,560
In addition, the company has fixed selling and administrative costs
of $170,900 per year.
During the year, Tri Town produces 50,400 snow shovels and sells
45,390 snow shovels....
Thank you. Exercise 13-7 The following data was prepared by the Wildhorse compan Variable Fixed Sales...
Thank you.
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(24 points) ROCKET, INC. open a small manufacturing firm on January 1, 20X1. Sales and Cost...
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[The following information applies to the questions displayed below.) Huron Chalk Company manufactures sidewalk chalk which...
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Need help filling out Requirement 2A.... Data Table January 1,600 meals 2,000 meals February 1,900 meals...
Need help filling out Requirement 2A....
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Data Table January 2018 0 Units produced and sold: Sales 800 meals Production Variable manufacturing cost...
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each. The company uses a fore manufacturing overhead location rate of 55 per game. Assume al...
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Exercise 17.32 On your way to a meeting with the board of directors, your assistant provides you with last month's income statements-one based on the variable costing method and one based on the absorption costing method. Unfortunately, your assistant, who is new, has used absorption costing terminology for both income statements. Sales Cost of goods sold Other expenses Net income Income Statement 1 $8,598 $3,009 4,195 7,204 $1,394 Income Statement 2 $8,598 $4,041 3,069 7,110 $1,488 Which income statement is...
On your way to a meeting with the board of directors, your assistant provides you with last month's income statements-one based on the variable costing method and one based on the absorption costing method. Unfortunately, your assistant, who is new, has used absorption costing terminology for both income statements. Sales Cost of goods sold Other expenses Net income Income Statement 1 $8,604 $3,013 4,152 7,165 $1,439 Income Statement 2 $8,604 $4,028 3,125 7,153 $1,451 Which income statement is based on...
The vice president of sales at Wildlife Corporation has received the income statement for January 2009. This statement, which was prepared on the basis of variable costing, is reproduced below. The firm has just adopted a variable costing system for internal reporting. Wildlife Corporation Income Statement For the Month of January 2009 $2,400,000 1,200,000 $1,200,000 Sales revenues Variable cost of goods sold Contribution margin Fixed costs Manufacturing Selling and administrative Operating income S600,000 400,000 1,000,000 $ 200,000 The controller attached...
Exercise 5-11 to Exercise 5-18
Tri Town Manufacturing produces snow shovels. The selling price per
snow shovel is $28.00. There is no beginning inventory.
Costs involved in production are:
Direct material
$6.00
Direct labor
4.00
Variable manufacturing overhead
4.00
Total variable manufacturing costs per unit
$14.00
Fixed manufacturing overhead per year
$196,560
In addition, the company has fixed selling and administrative costs
of $170,900 per year.
During the year, Tri Town produces 50,400 snow shovels and sells
45,390 snow shovels....
Thank you.
Exercise 13-7 The following data was prepared by the Wildhorse compan Variable Fixed Sales price Direct materials used Direct labor Manufacturing overhead Selling and administrative expense Units manufactured Beginning Finished Goods Inventory Ending Finished Goods Inventory 59.100 $12.800 $90,000 59.100 $98.000 $99.100 $21,400 18.000 units 20 200 units 23,100 units Under absorption costing, what is the unit product cost? (Round answer to 2 dec. Unit product cost LINK TO TEXT LINK TO TEXT LINK TO Under variable costing,...
(24 points) ROCKET, INC. open a small manufacturing firm on January 1, 20X1. Sales and Cost data for ROCKET, INC. during the first two months of 20X1 are given below: January February Selling Price (per unit). Fixed Costs (total). Variable Costs (per unit).... Number of units produced. Number of units sold. Required (BE CERTAIN YOU PLACE THE ANSWER IN THE CORRECT SPACE ON THE SEPARATE ANSWER SHEET): Using the FIFO inventory method Absorption Costing Variable (Direct) Costing ROCKET's' income for...
[The following information applies to the questions displayed below.) Huron Chalk Company manufactures sidewalk chalk which it sells online by the box at $26 per unit. Huron uses an actual costing system, which means that the actual costs of direct material, direct labor, and manufacturing overhead are entered into work-in- process inventory. The actual application rate for manufacturing overhead is computed each year, actual manufacturing overhead is divided by actual production (in units) to compute the application rate. Information for...
Need help filling out Requirement 2A....
Data Table January 1,600 meals 2,000 meals February 1,900 meals 1,600 meals is Sales Production Variable manufacturing expense per meal. Sales commission expense per meal. Total fixed manufacturing overhead Total fixed marketing and administrative expenses is A 800 500 A Print Done Requirement 1. Compute the product cost per meal produced under absorption costing and under variable costing Do this first for January and then for February January February Absorption Variable Absorption Variable costing...
Data Table January 2018 0 Units produced and sold: Sales 800 meals Production Variable manufacturing cost per meal Sales commission cost per meal Total fixed manufacturing overhead Total fixed selling and administrative costs 1,000 meals 5 650 400 Print Done Maria's Foods produces frozen meals that It sells for $12 each. The company computes a new monthly produces frozen meals that it sells for $12 each. The company computes a new monthly foxed manufacturing overhead allocation rate based on the...
each. The company uses a fore manufacturing overhead location rate of 55 per game. Assume al cos data are from Game Play's first two months in business during 2018 and production levels are exactly as planned. The Requirements Data Table 2.800 units Compute the product cost per game produced under absorption costing and under variable casting Prepare monthly income statements for October and November, including columns for each month and a column, using these costing methods absorption costing b. variable...
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