Question

Appliance Apps has the following costs associated with its production and sale of devices that allow appliances to receive commands from cell phones.

eBook Calculator Print Item Appliance Apps has the following costs associated with its production and sale of devices that allow appliances to receive commands from cell phones. Beginning Inventory Units Produced 25,000 Units Sold 20,000 Selling Price per Unit $144 Variable Sales and Administration Expenses Fixed Sales and Administration Expenses $975,000 Direct Material Cost per Unit Direct Labor Cost per Unit $10 Variable Manufacturing Overhead Cost per Unit $4 Fixed Manufacturing Overhead Cost per Month $977,500 $26 Prepare an income statement under the absorption method. If an amount box does not require an entry, leave it blank. Appliance Apps Income Statement: Absorption Sales 2007 Cost of Goods Sold: Beginning Inventory Cost of Goods Manufactured Cost of Goods Available for Sale Ending Inventory Total Cost of Goods Sold Gross Profit Check My Works Previous Next > All work saved. work saved. Email Instructor Save and Exit Submit Assignment for Grading

Answer 1

Absorption cost per unit produced= Direct material per unit+ Labour cost per unit +Variable overhead per unit + Fixed overheads per unit = 26+10+4+(977500/25000) 79.1 Variable manufacturing cost per unit=26+10+4 = 40 Amount 2880000 Income Statement under Absorption Costing Computation Amount Amount Sales 20000*144 2880000 Cost of goods sold: Beginning inventory Cost of goods manufactured 25000*79.1 1977500 Cost of goods available for sale 1977500 Ending inventory 5000*79.1 395500 Total cost of goods sold 1582000 Gross profit (sales-cost of goods sold) 1298000 Income Statement under variable Costing Computation Amount Sales 20000*144 Cost of goods sold: Beginning inventory Cost of goods manufactured 25000*40 1000000 Cost of goods available for sale 1000000 Ending inventory 5000*40 200000 Total cost of goods sold Gross profit (sales-cost of goods sold) (+) II 800000 2080000 Sales & administrative expense:- Variable 20000*5 Fixed Total Sales & administrative expense:- Net operating income 100000 975000 100000 1980000 1075000 223000 Sales & administrative expense:- Variable 20000*5 Contribution Fixed manufacturing overhead cost Fixed sales & administration expenses Total Fixed cost Net operating income (contribution-fixed cost) 977500 975000 1952500 27500

223000 Less: Reconciliation Absorption costing net income Fixed manufacturing overheads included in ending inventory (39.1*5000) 195500 Variable costing net income 27500