Homework Answers
a)
| REB ARROW BLUEBERRIES | ||
| Functional (Absorption costing) income statement | ||
| For the summar quarter 2017 | ||
| Sales (8,700*$60) | $ 522,000 | |
| Cost of goods sold | ||
| Variable cost (9,000*($8+$9+$3) | $ 180,000 | |
| Fixed cost | $ 300,000 | |
| Goods available | $ 480,000 | |
| Ending inventory ($480,000/9,000*300) | $ 16,000 | $ 464,000 |
| Gross profit | $ 58,000 | |
| Operating expense | ||
| Variable selling and administrative (8,700*$2) | $ 17,400 | |
| Fixed selling and administrative | $ 48,000 | $ 65,400 |
| Net income | $ (7,400) | |
b)
| REB ARROW BLUEBERRIES | ||
| Functional (Variable costing) income statement | ||
| For the summar quarter 2017 | ||
| Sales (8,700*$60) | $ 522,000 | |
| Variable expenses | ||
| Manufacturing (8,700*($8+9+3) | $ 174,000 | |
| Selling and administrative (8,700*$2) | $ 17,400 | $ 191,400 |
| Contribution margin | $ 330,600 | |
| Fixed expenses | ||
| Manufacturing overhead | $ 300,000 | |
| Selling and administrative | $ 48,000 | $ 348,000 |
| Net income | $ (17,400) | |
c and d
| Absorption costing | Variable costing | |
| Variable manufacturing cost ($8+$9+$3) | $ 20.00 | $ 20.00 |
| Fixed manufacturing cost ($300,000/9,000) | $ 33.33 | $ - |
| Manufacturing cost per unit | $ 53.33 | $ 20.00 |
| Ending inventory | 300 | 300 |
| Cost of ending inventory | $ 16,000 | $ 6,000 |
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