Homework Help is Here – Start Your Trial Now!
Business
Accounting
a Income Statement (absorption costing) For the Year Ended December 31, 2019 Sales Cost of goods sold: Total manufacturing costs Gross profit Net income Income Statement (variable costing) For the Year Ended December 31, 2019 Sales 2,800,000 Variable cost of goods sold: Operating expenses Direct materials Direct labor Manufacturing overhead Total variable manufacturing costs 175,000 880,000 720,000 544,000 2,319,000 268,000 Total variable cost Manufacturing margin 2,051,000 $ 749,000 175,000 Contribution margin Less: fixed costs and expenses Manufacturing overhead Operating expenses Total fixed costs and expenses 574,000 $ 320,000 240,000 560,000 Net income 14,000

a Income Statement (absorption costing) For the Year Ended December 31, 2019 Sales Cost of goods sold: Total manufacturing costs Gross profit Net income Income Statement (variable costing) For the Year Ended December 31, 2019 Sales 2,800,000 Variable cost of goods sold: Operating expenses Direct materials Direct labor Manufacturing overhead Total variable manufacturing costs 175,000 880,000 720,000 544,000 2,319,000 268,000 Total variable cost Manufacturing margin 2,051,000 $ 749,000 175,000 Contribution margin Less: fixed costs and expenses Manufacturing overhead Operating expenses Total fixed costs and expenses 574,000 $ 320,000 240,000 560,000 Net income 14,000

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management analysis
Section: Chapter Questions
Problem 2BE
See similar textbooks
icon
Related questions
Question
100%

Summarized data for 2019 (the first year of operations) for Gorman Products, In. are as follows

Sales (70,000 units) $2,800,00
Production costs (80,000 units):  
     Direct materials 880,000
     Direct labor 720,000
Manufacturing overhead:  
     Variable 544,000
     Fixed 320,000
Operating expenses:  
     Variable 175,000
     Fixed 240,000
Depreciation on equipment 60,000
Real estate taxes 18,000
Personal property taxes (inventory and equipment 28,000
Personnel department expenses 30,000

 

a.) Prepare an income statement based on full absortion costing

b) Prepare an income statement based on variable costing (I completed this, see attached spreadsheet.  I just need help on a, c, and d)

c) Assume that you must decide quickly whether to accept a special one-time order for 1000 units for $25 per unit.  Which income statement presentthe most relevant data?  Determine the apparent profit or loss on the special order based solely on these data.

d) If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss?  Why?

a Income Statement (absorption costing) For the Year Ended December 31, 2019 Sales Cost of goods sold: Total manufacturing costs Gross profit Net income Income Statement (variable costing) For the Year Ended December 31, 2019 Sales 2,800,000 Variable cost of goods sold: Operating expenses Direct materials Direct labor Manufacturing overhead Total variable manufacturing costs 175,000 880,000 720,000 544,000 2,319,000 268,000 Total variable cost Manufacturing margin 2,051,000 $ 749,000 175,000 Contribution margin Less: fixed costs and expenses Manufacturing overhead Operating expenses Total fixed costs and expenses 574,000 $ 320,000 240,000 560,000 Net income 14,000
Transcribed Image Text:a Income Statement (absorption costing) For the Year Ended December 31, 2019 Sales Cost of goods sold: Total manufacturing costs Gross profit Net income Income Statement (variable costing) For the Year Ended December 31, 2019 Sales 2,800,000 Variable cost of goods sold: Operating expenses Direct materials Direct labor Manufacturing overhead Total variable manufacturing costs 175,000 880,000 720,000 544,000 2,319,000 268,000 Total variable cost Manufacturing margin 2,051,000 $ 749,000 175,000 Contribution margin Less: fixed costs and expenses Manufacturing overhead Operating expenses Total fixed costs and expenses 574,000 $ 320,000 240,000 560,000 Net income 14,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Financial Reporting in Hyperinflationary Economies
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
Accounting
ISBN:
9781111581565
Author:
Gaylord N. Smith
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS