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Homework Answers
| Ans. 2 | DOWELL COMPANY | |||||
| Reconciliation of Variable Costing Income to Absorption Costing Income | ||||||
| 2016 | 2017 | |||||
| Variable costing income (loss) | ($66,750) | $398,250 | ||||
| Add: Ending inventory at fixed overhead per unit (10,000 * $10) | $100,000 | |||||
| Less: Beginning inventory | ($100,000) | |||||
| Absorption costing income (loss) | $33,250 | $298,250 | ||||
| *Ending inventory of Period year (2016) is the beginning for current year (2017). | ||||||
| *WORKING NOTES : (Calculations for Net income under Variable Costing method) | ||||||
| In variable costing method, the unit product cost is the sum of only variable | ||||||
| manufacturing costs per unit | ||||||
| Unit product cost under Variable Costing: | ||||||
| Direct materials | $5 | |||||
| Direct labor | $9 | |||||
| Variable overhead | $9 | |||||
| Total production cost per unit | $23 | |||||
| DOWELL COMPANY | ||||||
| Variable Costing | ||||||
| Income Statement | ||||||
| PARTICULARS | 2016 | 2017 | ||||
| Sales | $1,008,000 | $1,968,000 | ||||
| Less: Variable cost of goods sold: | ||||||
| Opening inventory | $0 | $230,000 | ||||
| Add: Cost of goods produced | $713,000 | $713,000 | ||||
| Variable cost of goods available for sale | $713,000 | $943,000 | ||||
| Less: Ending inventory | -$230,000 | $0 | ||||
| Variable cost of goods sold | $483,000 | $943,000 | ||||
| Gross Contribution Margin | $525,000 | $1,025,000 | ||||
| Less: Variable Selling and Administrative Expenses | $36,750 | $71,750 | ||||
| Contribution Margin | $488,250 | $953,250 | ||||
| Less: Fixed expenses: | ||||||
| Fixed manufacturing overhead | $310,000 | $310,000 | ||||
| Fixed selling and administrative expenses | $245,000 | $555,000 | $245,000 | $555,000 | ||
| Net operating income | ($66,750) | $398,250 | ||||
| *Cost of goods produced = Units produced * Unit product cost | ||||||
| 2016 (3,1000 * $23) | $713,000 | |||||
| 2017 (3,1000 * $23) | $713,000 | |||||
| Ending inventory units (2016) = Beginning inventory + Units produced - Units sold | ||||||
| 2016 = 0 + 31,000 - 21,000 = 10,000 | ||||||
| Cost of ending inventory = Ending inventory units * Unit product cost | ||||||
| 2016 = 10,000 * $23 = $230,000 | ||||||
| *Beginning inventory | ||||||
| 2016 = $0 | ||||||
| 2017 (ending inventory of 2016) = $230,000 (units 10,000 * $23) | ||||||
| Ending inventory units (2017) = Beginning inventory + Units produced - Units sold | ||||||
| 2017 = 10,000 + 31,000 - 41,000 = 0 | ||||||
|
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Required information
[The following information applies to the questions
displayed below.]
Dowell Company produces a single product. Its income statements
under absorption costing for its first two years of operation
follow.
2016
2017
Sales ($48 per unit)
$
1,056,000
$
2,016,000
Cost of goods sold ($33 per unit)
726,000
1,386,000
Gross margin
330,000
630,000
Selling and administrative expenses
300,000
350,000
Net income
$
30,000
$
280,000
Additional Information
Sales and production data for these first two years
follow.
2016
2017...
[The following information applies to the questions
displayed below.]
Dowell Company produces a single product. Its income statements
under absorption costing for its first two years of operation
follow.
2016
2017
Sales ($48 per unit)
$
1,056,000
$
2,016,000
Cost of goods sold ($33 per unit)
726,000
1,386,000
Gross margin
330,000
630,000
Selling and administrative expenses
300,000
350,000
Net income
$
30,000
$
280,000
Additional Information
Sales and production data for these first two years
follow.
2016
2017
Units produced...
Required information [The following information applies to the questions displayed below.] Dowell Company produces a single product. Its Income statements under absorption costing for its first two years of operation follow Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses Net income 2016 2017 $966,000 $1,886,000 651,000 1,271,000 315,000 615,000 292,250 337,250 $ 22,759 $ 277,750 Additional Information a. Sales and production data for these first two years follow. Units produced Units...
Required information (The following information applies to the questions displayed below. Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Sales ($48 per unit) Cost of goods sold ($33 per unit) Gross margin Selling and administrative expenses Net income 2018 2019 $1,164,000 $2,064,000 759,000 1,419,000 345,000 645,000 297,500 347,500 $ 47,500 $ 297,500 Additional Information a. Sales and production data for these first two years follow. Units produced Units...
Required information (The following information applies to the questions displayed below) Dowell Company produces a single product. It income statements under absorption costing for its first two years of operation follow 2018 2019 Sales ($44 per unit) $1,056,000 $1,936,000 Cost of goods sold ($29 per unit) 696,000 1,276,000 Gross margin 360,000 660,000 Selling and administrative expenses 299.000 344,000 Net Income 61,000 $ 316,000 Additional Information a. Sales and production data for these first two years follow. Units produced Units sold...
The following information applies to the questions displayed below Dowell Company produces a single product. Its income statements under absorption costing for Its first two years of operation follow. 2017 2016 $966,000 $1,886,000 651,000 1,271,000 315,000 292,250 Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses 615,000 337,250 $ 22,750 277,750 Net income Additional Information a. Sales and production data for these first two years follow. 2017 31,000 31,000 21,000 41,000 2016...
Required information [The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow Sales ($44 per unit) cout of goods sold ($29 per unit) Gross margin Selling and administrative expenses Net income 2018 2019 $880,000 $1,760,000 580,000 1,160,000 300,000 600,000 285,000 325,000 $ 15,000 $275,000 Additional Information a. Sales and production data for these first two years follow. Units produced 2018 30,000...
Required information The following information applies to the questions displayed below) Dowell Company produces a single product. Its Income statements under absorption costing for its first two years of operation follow 2018 2019 Sales ($44 per unit) $1,056,000 $1,936.000 Cost of goods sold ($29 per unit 696,000 1,275,000 Gross margin 360,000 660,000 Selling and administrative expenses 299,000 344.000 Net income $ 61,000 $316,000 Additional information a. Sales and production data for these first two years follow Units produced Units sold...