Question

Osawa, Inc., planned and actually manufactured 190,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $17 per unit produced. Variable operating (nonmanufacturing) cost was Sa per unit sold. Planned actual fixed manufacturing costs were 5570,000. Planned and actual fixed operating inonmanufacturing) costs totaled $400,000. Osawa sold 120,000 units of product at $43 per unit. Read the requirements. Requirement 2. Osawa's 2017 operating Income using variable costing is (a) $1,760,000, (b) $1,400.000, (c) $1,190,000, (d) $1,590.000, or (e) none of these. Show supporting calculations. Begin by selecting the labels used in the variable costing calculation of operating income and enter the supporting amounts. Perform the calculations in this step, but select the correct operating income in the next step. (For amounts with a 50 balanc make sure to enter "O' in the appropriate cell.) Variable costing A Requirements 1. Osawa's 2017 operating income using absorption costing is (a) $1,400,000, (b) 51,190,000, (c) $1,590,000, (d) $1,800,000, or (e) none of these. Show supporting calculations. 2. Osawa's 2017 operating income using variable costing is (a) $1,760,000, (b) 51,400,000, (C) $1,190,000, (d) $1,590,000, or (e) none of these. Show supporting calculations. Print Done Operating income Osawa's 2017 operating income using variable costing is O A. $1,760,000. OB. $1,400,000 OC. $1,190.000 OD. 51,590.000 Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1

(a)	Absorption costing-Income Statement
		Amount in $
	Sales	5,160,000	(120,000 x 43 )
	Cost of Goods Sold:
	Beginning Inventory	-
	Add: Cost of Goods Manufactured	3,800,000	( 17 x 190,000 ) + 570,000
	Cost of Goods Available for Sale	3,800,000
	Less :Ending Inventory	1,400,000	(3,800,000 / 190,000 ) x 70,000
	Total Cost of Goods Sold	2,400,000
	Gross Profit	2,760,000
	Less :Fixed operating ( nonmanufacturing costs)	400,000
	Less :Variable operating ( nonmanufacturing costs)	960,000	(120,000 x 8 )
	Net Operating Income	1,400,000
	Correct answer is option (a) ( i.e. $ 1,400,000 ).
(b)	Variable Costing-Income Statement
		Amount in $
	Sales	5,160,000	(120,000 x 43 )
	Cost of Goods Sold:
	Beginning Inventory	-
	Add: Cost of Goods Manufactured	3,230,000	( 17 x 190,000 )
	Cost of Goods Available for Sale	3,230,000
	Less: Ending Inventory	1,190,000	(3,230,000 / 190,000 ) x 70,000
	Total Cost of Goods Sold	2,040,000
	Gross Contribution Margin	3,120,000
	Less: Variable operating (nonmanufacturing cost )	960,000	(120,000 x 8 )
	Contribution Margin	2,160,000
	Less :Fixed operating ( nonmanufacturing costs)	400,000
	Less :Fixed operating ( manufacturing costs)	570,000
	Net Operating Income	1,190,000
	Correct answer is option C ( i.e. $ 1,190,000 ).