Homework Answers
| Given: | ||||||||
| Production Volume | 100000 units | |||||||
| Closing Inventory | 20000 units | |||||||
| Units sold (100000-20000) | 80000 | |||||||
| Net Income as per Absorption costing | $480,000 | |||||||
| Net Income as per Variable costing | $440,000 | |||||||
| Under variable costing, only variable manufacturing cost is included as part of product costs. | ||||||||
| Under absorption costing, product cost includes both variable and fixed manufacturing costs. | ||||||||
| The difference between net income as per absorption costing and variable costing above is due to fixed manufacturing cost being part of inventory under absorption costing. | ||||||||
| Method | Net Income | |||||||
| Absorption costing | $480,000 | |||||||
| Variable costing | $440,000 | |||||||
| Fixed Manufacturing Cost in ending inventory | $40,000 | |||||||
| ($480000-$440000) | ||||||||
| Fixed manufacturing cost per unit | Fixed Manufacturing cost/No of units in inventory | |||||||
| $40000/20000 | ||||||||
| $2 Per unit | ||||||||
| Therefore total fixed manufacturing cost = No of units produced * Fixed manufacturing cost per unit in Inventory | ||||||||
| 100000*$2 | ||||||||
| $200,000 | ||||||||
| Fixed Manufacturing cost = $200000 | ||||||||
| Contribution = Fixed Cost +Net Income | ||||||||
| $200000+$440000 | ||||||||
| $640,000 | ||||||||
| Contribution = $640000 | ||||||||
| Contribution per unit = Contribution/No of units sold | ||||||||
| $640000/(100000 produced-20000 sold) | ||||||||
| $640000/80000 | ||||||||
| 8 | ||||||||
| Contribution per unit = $8 | ||||||||
| Break even point = Fixed Cost/Contribution per unit | ||||||||
| $200000/$8 | ||||||||
| 25000 | units | |||||||
| Thus, break-even point is 25,000 units. | ||||||||
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Problem One Absorption and Variable Costing; CVP Analysis Hawkesbury Company began operations on January 1 to...
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1) what is the amount of the difference between the variable
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Diego Company manufactures one product that is sold for $76 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 58,000 units and sold 54,000 units. Variable costs...
Variable and Absorption Costing Method
Salvador Corporation began operations in January. The company produced 10,000 units and sold 8,000 units in its first year of operations. Costs for the year were as follows:Fixed Manufacturing Costs 250,000Variable Manufacturing Costs 180,000Fixed Selling and Administrative Costs 75,000Variable selling and administrative Costs 80,000How would the net income of Salvador compare between variable and absorption costing methods?
19 Problem 19-2A Variable costing income statement and conversion to absorption costing income LO P2, P3...
19
Problem 19-2A Variable costing income statement and conversion to absorption costing income LO P2, P3 Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. $4,000,000 Sales (80,000 units * $50 per unit) Cost of goods sold Beginning inventory Cost of goods manufactured (100,000 units X $30 per unit) Cost of good available for sale Ending inventory (20,000 $30) Coat of...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. $40 per unit $60 per unit $3,000,000 $7,000,000 Manufacturing costs Direct materials Direct labor. Overhead costs for the year Variable overhead Fixed overhead ... Selling and administrative costs for the year Variable. Fixed Production and sales for the year Units produced Units sold ... Sales price per unit $770,000 $4,250,000 100,000 units 70,000 units $350 per unit 1....
Trez Company began operations this year. During this first year, the company produced 100,000 units and...
Trez Company began operations this year. During this first year,
the company produced 100,000 units and sold 80,000 units. The
absorption costing income statement for this year follows.
Sales (80,000 units × $40 per unit)
$
3,200,000
Cost of goods sold
Beginning inventory
$
0
Cost of goods manufactured (100,000 units × $20 per unit)
2,000,000
Cost of goods available for sale
2,000,000
Ending inventory (20,000 × $20)
400,000
Cost of goods sold
1,600,000
Gross margin
1,600,000
Selling and administrative...
Sims company began operations on January 1. Its cost and sales information for this year f
Sims Company began operations on January 1. Its cost and sales information for this year follow. Direct materials$ 30per unitDirect labor$ 50per unitVariable overhead$ 20per unitFixed overhead$ 8,800,000per yearVariable selling and administrative expenses$ 11per unitFixed selling and administrative expenses$ 4,250,000per yearUnits produced110,000unitsUnits sold80,000unitsSales price$ 360per unit 1. Prepare an income statement for the year using variable costing.2. Prepare an income statement for the year using absorption costing.Sims Company began operations on January 1. Its cost and sales information for this year follow. Direct materials$ 30per...
Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer...
Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows 35 per unit 55 per unit $3,000,000 $7,000,000 Manufacturing costs Direct materials Direct labor Overhead costs for the year Variable overhead Fixed overhead Selling and administrative costs for the year Variable Fixed Production and sales for the year Units produced Units sold Sales price per unit...
6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, Lo6- 2) factures and...
6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, Lo6- 2) factures and sells one product. The following information pertains to each of the company's fist hree years of operations Manufacturing: Direct materials Direct labor Variable manufacturing overhead 21 Variable selling and administrative Fixed costs per yeari s 330,000 s 150,000 Fixed manufacturing overhead Pixed selling and administrative expenses During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows Manufacturing costs Direct materials Direct labor Overhead costs for the year 35 per unit 55 per unit 2,000,000 8,000,000 Variable overhead Fixed overhead Selling and administrative costs for the year Variable Fixed 775,000 $5,000,000 Production and sales for the year Units produced Units sold Sales price per unit 100,000 units 70,000 units 350 per unit 1. Prepare an...
Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6- 2] Haas Company manu...
Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6- 2] Haas 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 27 Direct labor 14 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: 6 1 $ 510,000 Fixed manufacturing overhead Fixed selling and administrative expenses 210,000 During its first year of operations, Haas produced...
1) what is the amount of the difference between the variable
costing and absorption costing net operating incomes (losses)?
2) Whats the company's break-even point in unit sales?
is the above or below the actual unit sales?
Diego Company manufactures one product that is sold for $76 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 58,000 units and sold 54,000 units. Variable costs...
19
Problem 19-2A Variable costing income statement and conversion to absorption costing income LO P2, P3 Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. $4,000,000 Sales (80,000 units * $50 per unit) Cost of goods sold Beginning inventory Cost of goods manufactured (100,000 units X $30 per unit) Cost of good available for sale Ending inventory (20,000 $30) Coat of...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows. $40 per unit $60 per unit $3,000,000 $7,000,000 Manufacturing costs Direct materials Direct labor. Overhead costs for the year Variable overhead Fixed overhead ... Selling and administrative costs for the year Variable. Fixed Production and sales for the year Units produced Units sold ... Sales price per unit $770,000 $4,250,000 100,000 units 70,000 units $350 per unit 1....
Trez Company began operations this year. During this first year,
the company produced 100,000 units and sold 80,000 units. The
absorption costing income statement for this year follows.
Sales (80,000 units × $40 per unit)
$
3,200,000
Cost of goods sold
Beginning inventory
$
0
Cost of goods manufactured (100,000 units × $20 per unit)
2,000,000
Cost of goods available for sale
2,000,000
Ending inventory (20,000 × $20)
400,000
Cost of goods sold
1,600,000
Gross margin
1,600,000
Selling and administrative...
Exercise 19-3 Income reporting under absorption costing and variable costing LO P2 Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows 35 per unit 55 per unit $3,000,000 $7,000,000 Manufacturing costs Direct materials Direct labor Overhead costs for the year Variable overhead Fixed overhead Selling and administrative costs for the year Variable Fixed Production and sales for the year Units produced Units sold Sales price per unit...
6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, Lo6- 2) factures and sells one product. The following information pertains to each of the company's fist hree years of operations Manufacturing: Direct materials Direct labor Variable manufacturing overhead 21 Variable selling and administrative Fixed costs per yeari s 330,000 s 150,000 Fixed manufacturing overhead Pixed selling and administrative expenses During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year...
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2017. Its cost and sales information for this year follows Manufacturing costs Direct materials Direct labor Overhead costs for the year 35 per unit 55 per unit 2,000,000 8,000,000 Variable overhead Fixed overhead Selling and administrative costs for the year Variable Fixed 775,000 $5,000,000 Production and sales for the year Units produced Units sold Sales price per unit 100,000 units 70,000 units 350 per unit 1. Prepare an...
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