During the first month of operations ended June 30, 2016, Lucky Inc., has no beginning inventory and sales are estimated 20,000 units at $75 per unit. Also, sales can not be changed if more than 20,000 units are made. And next month, management of Lucky is evaluating whether to make 20,000 units(proposal 1) or 25,000 units(proposal 2). Costs and expenditures related to each proposal are shown below. Operating data for the month are summarized as follows; . unit price : $75 . unit variable manufacturing cost : $35 . fixed manufacturing cast : $400,000 . unit variable selling and administrative cost : $5 . fixed selling and administrative cost : $100,000 Instructions) 1. Make Absorption Costing Income Statement for Proposal 1 and Proposal 2 2. Make Variable Costing Income Statement for Proposal 1 and Proposal 2 3. Comment the following sentence "managers could misinterpret increases in income from operations due to changes in efficiencies"based on the answer from question 1 and question 2.

During the first month of operations ended June 30, 2016, Lucky Inc., has no beginning inventory and sales are estimated 20,000 units at $75 per unit. Also, sales can not be changed if more than 20,000 units are made. And next month, management of Lucky is evaluating whether to make 20,000 units(proposal 1) or 25,000 units(proposal 2). Costs and expenditures related to each proposal are shown below. Operating data for the month are summarized as follows; . unit price : $75 . unit variable manufacturing cost : $35 . fixed manufacturing cast : $400,000 . unit variable selling and administrative cost : $5 . fixed selling and administrative cost : $100,000 Instructions) 1. Make Absorption Costing Income Statement for Proposal 1 and Proposal 2 2. Make Variable Costing Income Statement for Proposal 1 and Proposal 2 3. Comment the following sentence "managers could misinterpret increases in income from operations due to changes in efficiencies"based on the answer from question 1 and question 2.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...

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Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual variable unit cost is as follows: Fixed overhead was 320,000. Fixed selling expenses consisted of advertising copayments totaling 110,000. Fixed administrative expenses were 236,000. There were no beginning and ending work-in-process inventories. Beginning finished goods inventory was 148,000 for 4,000 juicers. The value of ending inventory reported on the financial statements was Refer to the information in 2.24. The gross margin percentage for last year was a. 12.57% b. 55.67% c. 28.95% d. 38.33%
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