Question

Variable and Absorption Costing Summarized data for 2019 (the first year of operations) for Gorman Products, Inc., are as follows: Sales (70,000 units) $2,800,000 Production costs (80,000 units) 880,000 Direct material Direct labor 720,000 Manufacturing overhead: Variable 544,000 Fixed 320,000 Operating expenses: Variable 175,000 Fixed 240,000 Depreciation on equipment 60,000 Real estate taxes 18,000 Personal property taxes (inventory & equipment) 28,800 Personnel department expenses 30,000 a. Prepare an income statement based on full absorption costing. Only use a negative sign with your answer for net income (loss), if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Absorption Costing Income Statement Sales Cost of Goods Sold: Beginning Inventory Direct materials Direct labor Less: Ending Inventory Cost of Goods Sold

Answer 1

solution Given that 6-сoman pooducts I'ML calculation of Beginning and I ending inventory zola Beginning inventory Add: Pooduction Note less: Sales 70.000 Ending inverfasy 10,000 A 2019 20,000 B calculation of peo Unit rates sales onits sales value sell porce 2800,000 40,00 DC/B Total Perunt 80,000 480,000 11 Pooduction Coonit5) Dioect matesoran This is direct material costs/ I prooduction this is direct laboo costs/ production onit) g Direct laboo 720,000 Manufacturing wesheed waoyable 544,000 6.80 Fired 320,000 thing is voorable manufacturing overshead this is Axed manufacturing overhead u

calculation of ending inventory values peronit I Total Ending inventory Onits 10.000 Direct material 110,000 Direct labos this is per unit Direct Material (08sx Ending inventory this is per unit Direct labos costs, ending inventory 90,00 Manufacturing weshead vadiable 6.80 68000 This is per unft variable Manufacturing oueshead this is per unit fized Marme factuding oveshead. Fixed 40,000 Ending inventory 308000 Personit Total (0.600 Ending inventory Disect material 110,000 this is pero wnit Direct matedral costsy Ending inuenlosy this is personit Direct labor costsX Ending inventory 90,000 Disect labor manufacturing oversheid this is peronit van alle 6.90 680000 This is per unit variable manufacturing overhead Ending inventory 268.000

calculatron of ending opescating Eppenseg. operating Expenses vadiable 175000 Freed 240,000 Depreciation of equipment 60,000 Real Estate Tazes 181000 peosonal poopasty tanes 28.800 peasonal department 30,000 Expenses Ofegating topenses 557,800 or Absoop lioncosting Answeo (9) 2019 2,800,000 sales value cost of croods sold 880,000 Beginning inventory Direct material Direct Labor 720,000 Manu facturing oveshead 864,000 Less, Ending inventory 308,000 cost of Goods sold 2,156000 see potelt) Gooss Pooft bu4,000

operating Expenses 55180 Net income 92,200 Answer (6) variable costing 2019 2,800,000 sales value vadiable cost of Goods sold Beginning invertory piqect materiais 880.000 Direct labos 720,000 manufactersing oveshead 524.000 Lesso Ending inventory 2 68.000 pole CF) Looiable cost of Goods soll 1876.000 contribution 920,000 Less. Fized costs manufacturing over head 320,000 offroating Expenses 551,800 Noteca) Net income 52,200 Answer (C) variable costing income statement Presents relevant data the most

Per conit 6-80 26-80 Direct materials Dioect labos Many facturing oveshead variable Total costs pesanft sell poice LOSS per on't Onits sold pet loss 25 1.80 J=H-1 1000 1800 k 2²5 xk) - Answer d Absooption costing approach because the cost should include a reasonable portion of fived manufacturing costs-