Shawnee Motors Inc. assembles and sells snowmobile engines. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August:
1 |
Sales (31,000 units) |
$7,750,000.00 |
|
2 |
Production costs (38,000 units): |
||
3 |
Direct materials |
$3,040,000.00 |
|
4 |
Direct labor |
1,710,000.00 |
|
5 |
Variable factory overhead |
950,000.00 |
|
6 |
Fixed factory overhead |
570,000.00 |
6,270,000.00 |
7 |
Selling and administrative expenses: |
||
8 |
Variable selling and administrative expenses |
$1,120,000.00 |
|
9 |
Fixed selling and administrative expenses |
200,000.00 |
1,320,000.00 |
Required: | |||
a. | Prepare an income statement according to the absorption costing concept.* | ||
b. | Prepare an income statement according to the variable costing concept.* | ||
c. | What is the reason for the difference in the amount of income
from operations reported in (a) and (b)?
|
Solution a:
Solution b:
Solution c:
The reason for the difference in the amount of income from operations reported in (a) and (b) is because fixed factory overhead ($570000/38000 *7000 = $105000) is deferred in ending inventory of 7000 units under absorption costing
Shawnee Motors Inc. assembles and sells snowmobile engines. The company began operations on August 1 and...
Gallatin County Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1 and operated at 100% of capacity during the first month. The following data summarize the results for July: 1 Sales (31,000 units) $7,750,000.00 2 Production costs (38,000 units): 3 Direct materials $3,040,000.00 4 Direct labor 1,710,000.00 5 Variable factory overhead 950,000.00 6 Fixed factory overhead 570,000.00 6,270,000.00 7 Selling and administrative expenses: 8 Variable selling and administrative expenses $1,120,000.00 9 Fixed selling and administrative...
Instructions Shawn Motors Inc. assembles and sells snowmobile engines. The company began operations on August 1 and operated of 100% of capacity during the first month. The following data summarize the results for August: $750.00000 1 Sales (31,000 units) Production costs (38,000 units Direct materials $3,040,000.00 Direct labor 1.710,000.00 950000.00 570,000.00 6,270,000.00 Variable factory overhead Fixed factory overhead Selling and administrative expenses: Variable selling and administrative expenses Faxed selling and administrative expenses $1,120,000.00 20000000 132000000 Required: 6. Prepare an income...
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Income Statements under Absorption and Variable Costing Shawnee Motors Inc, assembles and sells snowmobile engines. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: $600,000 Sales (2,000 units) Production costs (2,400 units): Direct materials Direct labor $300,000 115,200 43,200 21,600 Variable factory overhead Fixed factory overhead 480,000 Selling and administrative expenses: Variable selling and administrative expenses $50,000 22,000 Fixed selling and administrative expenses 72,000...
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells snownmobile engines. The company began operations on August 1 and operated at 100 % of capacity during the first month. The following data summarize the results for August: Sales (2,000 units) $600,000 Production costs (2,400 units): Direct materials $300,000 Direct labor 115,200 Variable factory overhead 43,200 Fixed factory overhead 21,600 480,000 Selling and administrative expenses: Variable selling and administrative expenses $50,000 Fixed selling and administrative expenses 22,000...
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: $1,280,000 Sales (8,000 units) Production costs (10,000 units): Direct materials $592,000 Direct labor 284,000 142,000 Variable factory overhead Fixed factory overhead 95,000 1,113,000 Selling and administrative expenses: Variable selling and administrative expenses Fixed selling and administrative expenses $172,500 66,800 239,300...
Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (16,500 units) $1,485,000 Production costs (21,000 units): Direct materials $699,300 Direct labor 336,000 Variable factory overhead 168,000 Fixed factory overhead 111,300 1,314,600 Selling and administrative expenses: Variable selling and administrative expenses $203,800 Fixed selling and administrative expenses 78,900 282,700...
help solving this Income Statements under Absorption and Variable Costing Shawnee Motors Inc. assembles and sells MP3 players. The company began operations on August 1 and operated at 100% of capacity during the first month. The following data summarize the results for August: Sales (10,000 units) $1,200,000 Production costs (13,000 units): Direct materials $577,200 Direct labor 276,900 Variable factory overhead 139,100 Fixed factory overhead 92.300 1,085,500 Selling and administrative expenses: Variable selling and administrative expenses $168,300 Fixed selling and administrative...