The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2018 2019 Sales ($46 per unit) $ 920,000 $ 1,840,000 Cost of goods sold ($31 per unit) 620,000 1,240,000 Gross margin 300,000 600,000 Selling and administrative expenses 290,000 340,000 Net income $ 10,000 $ 260,000 Additional Information Sales and production data for these first two years follow. 2018 2019 Units produced 30,000 30,000 Units sold 20,000 40,000 Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following. Direct materials $ 5 Direct labor 9 Variable overhead 7 Fixed overhead ($300,000/30,000 units) 10 Total product cost per unit $ 31 Selling and administrative expenses consist of the following. 2018 2019 Variable selling and administrative expenses ($2.50 per unit) $ 50,000 $ 100,000 Fixed selling and administrative expenses 240,000 240,000 Total selling and administrative expenses $ 290,000 $ 340,000 1. Prepare income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.) 2. Prepare a table as in Exhibit 6.12 to convert variable costing income to absorption costing income for both 2018 and 2019. (Loss amounts should be entered with a minus sign.)
The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2018 2019 Sales ($46 per unit) $ 920,000 $ 1,840,000 Cost of goods sold ($31 per unit) 620,000 1,240,000 Gross margin 300,000 600,000 Selling and administrative expenses 290,000 340,000 Net income $ 10,000 $ 260,000 Additional Information Sales and production data for these first two years follow. 2018 2019 Units produced 30,000 30,000 Units sold 20,000 40,000 Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following. Direct materials $ 5 Direct labor 9 Variable overhead 7 Fixed overhead ($300,000/30,000 units) 10 Total product cost per unit $ 31 Selling and administrative expenses consist of the following. 2018 2019 Variable selling and administrative expenses ($2.50 per unit) $ 50,000 $ 100,000 Fixed selling and administrative expenses 240,000 240,000 Total selling and administrative expenses $ 290,000 $ 340,000 1. Prepare income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.) 2. Prepare a table as in Exhibit 6.12 to convert variable costing income to absorption costing income for both 2018 and 2019. (Loss amounts should be entered with a minus sign.)
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 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...
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The following information applies to the questions displayed below.]
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.
2018 | 2019 | |||||
Sales ($46 per unit) | $ | 920,000 | $ | 1,840,000 | ||
Cost of goods sold ($31 per unit) | 620,000 | 1,240,000 | ||||
Gross margin | 300,000 | 600,000 | ||||
Selling and administrative expenses | 290,000 | 340,000 | ||||
Net income | $ | 10,000 | $ | 260,000 | ||
Additional Information
- Sales and production data for these first two years follow.
2018 | 2019 | |||
Units produced | 30,000 | 30,000 | ||
Units sold | 20,000 | 40,000 | ||
- Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following.
Direct materials | $ | 5 | |
Direct labor | 9 | ||
Variable overhead | 7 | ||
Fixed overhead ($300,000/30,000 units) | 10 | ||
Total product cost per unit | $ | 31 | |
- Selling and administrative expenses consist of the following.
2018 | 2019 | |||||
Variable selling and administrative expenses ($2.50 per unit) | $ | 50,000 | $ | 100,000 | ||
Fixed selling and administrative expenses | 240,000 | 240,000 | ||||
Total selling and administrative expenses | $ | 290,000 | $ | 340,000 | ||
1. Prepare income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.)
2. Prepare a table as in Exhibit 6.12 to convert variable costing income to absorption costing income for both 2018 and 2019. (Loss amounts should be entered with a minus sign.)
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