January February March Unit data: Beginning inventory 150 150 Production 1,500 1,400 1,520 Sales 1,350 1,400 1,530 Variable costs: $ 1,000 $ 1,000 $ 1,000 Manufacturing cost per unit produced Operating (marketing) cost per unit sold 800 800 800 Fixed costs: Manufacturing costs Operating (marketing) costs $525,000 $525,000 $525,000 $130,000 $130,000 $130,000 The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,500 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. 1. Prepare income statements for EntertainMe in January, February, and March 2017 under (a) variable costing and (b) absorption costing. 2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing.
January February March Unit data: Beginning inventory 150 150 Production 1,500 1,400 1,520 Sales 1,350 1,400 1,530 Variable costs: $ 1,000 $ 1,000 $ 1,000 Manufacturing cost per unit produced Operating (marketing) cost per unit sold 800 800 800 Fixed costs: Manufacturing costs Operating (marketing) costs $525,000 $525,000 $525,000 $130,000 $130,000 $130,000 The selling price per unit is $3,300. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,500 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. 1. Prepare income statements for EntertainMe in January, February, and March 2017 under (a) variable costing and (b) absorption costing. 2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing.
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 24E: Banwood Company has the following information for 20x1: There were no beginning inventories. What is...
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Variable and absorption costing, explaining operating-income differences. EntertainMe Corporation manufactures and sells 50-inch television sets and uses
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