Question

Galvin Motors assembles the fully electric Model S-85 automobile at its Hayward, California, plant. The standard variable manufacturing cost per vehicle in 2017 is $56,600, which consists of: (Click the icon to view the variable cost per vehicle information.) (Click the icon to view additional information.) Galvin started production of the Model S-85 in 2017. The actual production and sales figures for the first three months of the year are: (Click the icon to view the production and sales figures.) (Click the icon to view additional information.) Read the requirements. The total manufacturing cost per unit is $ 76,620 Requirement 2. Compute the monthly operating income for January, February, and March under absorption costing. What amount of bonus is paid each month to Kaz Schmid? Data Table January February March Complete the income statement first, then compute the bonus paid each month to Kaz Schmid. (Complete all answer boxes. Enter a "O" for any zero balance accounts. Label any v not have a variance, do not select a label. Abbreviation used; Adj. = Adjustment, Mfg. = Manufacturing.) January February March Data Table Revenues 174600000 232800000 329800000 Cost of goods sold: Direct materials $ 32,000 Beginning inventory 01 Direct manufacturing labor $ 11,600 Variable manufacturing overhead $ 13,000 Production 3,300 2,200 3,500 Sales 1,800 2,400 3,400 Print Done More Info More Info Kaz Schmid is SVP of Galvin and director of the Hayward plant. His compensation includes a bonus that is 0.20% of monthly operating income, calculated using absorption costing. Galvin prepares absorption-costing income statements monthly, which include an adjustment for the production-volume variance occurring in that month. There are no variable cost variances fixed overhead spending variances in the first three months of 2017. The Hayward plant is credited with revenue (net of marketing costs) of $97,000 for the sale of each Galvin S-85 vehicle. Variable manufacturing overhead is allocated to vehicles on the basis of assembly time. The standard assembly time per vehicle is 26 hours. The Hayward plant is highly automated and has a practical capacity of 3,600 vehicles per month. The budgeted monthly fixed manufacturing overhead is $52,052,000. Fixed manufacturing overhead is allocated on the basis of the standard assembly time for the budgeted normal capacity utilization of the plant. For 2017, the budgeted normal capacity utilization is 2,600 vehicles per month. Choose from any list or enter any number in the input fields and t parts remaining

Answer 1

a. Fixed manufacturing overhead cost per unit	=	52,052,000 / (2600 vehicles x 26 standard hours)
	=	$770 per standard assembly hour
		or 770x26 = $20020 per vehicle
b. Total manufacturing cost per unit
		$ per unit
Direct materials per unit		32000
Direct manufacturing labor per unit		11600
Variable manufacturing overhead per unit		13000	56600
Fixed manufacturing overhead per unit		20020
Total manufacturing cost per unit		76620
req.2
	Absorption Costing
	jan	feb	mar
units produced	3300	2200	3500
Revenues (A)	174600000	232800000	329800000
Cost of goods sold -
Beginning inventory	0	114930000	99606000
Variable manufacturing costs ($56600*units produced)	186780000	124520000	198100000
Allocated fixed manufacturing costs ($20020*units produced)	66066000	44044000	70070000
Cost of goods available for sale	252846000	283494000	367776000
Deduct- ending inventory ($76620*ending inventory)	114930000	99606000	107268000
Adjustment for production-volume variance (WN)	-14014000	8008000	-18018000
Cost of goods sold (B)	123902000	191896000	242490000
OPERATING INCOME (A-B)	50698000	40904000	87310000
bonus (0.20% of op. income)	101396	81808	174620

	workings-
s.no.	particulars	calculation	jan	feb	mar
a	Beginning inventory		0	1500	1300	units
b	add- production units		3300	2200	3500	units
c	goods avaliable for sale		3300	3700	4800	units
d	less- sales		1800	2400	3400	units
e	ending inventory		1500	1300	1400	units
f	denominator level	2600*26	67600	67600	67600
g	hours of production	26 standard hour*units produced	85800	57200	91000
j	budgeted fixed overhead		52052000	52052000	52052000
k	allocated fixed maufacturing costs per hour	j/f	770	770	770
l	allocated fixed maufacturing overhead costs	k*g	66066000	44044000	70070000
	Adjustment for production-volume variance	j-l	-14,014,000	8,008,000	-18,018,000