Units produced Units sold Year 1 23,000 18,000 Year 2 23,000 28,000 required: Using variable costing, what is the unit product cost for both years? What is the variable costing net operating income in Year 1 and in Year 2? Reconcile the absorption costing and the variable costing net operating income figures for each year. ariable costing net operating income (loss) Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2

Units produced Units sold Year 1 23,000 18,000 Year 2 23,000 28,000 required: Using variable costing, what is the unit product cost for both years? What is the variable costing net operating income in Year 1 and in Year 2? Reconcile the absorption costing and the variable costing net operating income figures for each year. ariable costing net operating income (loss) Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2

Accounting

27th Edition

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Chapter21: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21.28EX: Appendix Absorption costing income statement On June 30, the end of the first month of operations,...

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Variable costingsales exceed production The beginning inventory is 52,800 units. All of the units that were manufactured during the period and 52,800 units of the beginning inventory were sold. The beginning inventory fixed manufacturing costs are 14.70 per unit, and variable manufacturing costs are 30 per unit. Determine (A) whether variable costing operating income is less than or greater than absorption costing operating income, and (B) the difference in variable costing and absorption costing operating income.
Variable-Costing and Absorption-Costing Income Borques Company produces and sells wooden pallets that are used for moving and stacking materials. The operating costs for the past year were as follows: During the year, Borques produced 200,000 wooden pallets and sold 204,300 at 9 each. Borques had 8,200 pallets in beginning finished goods inventory; costs have not changed from last year to this year. An actual costing system is used for product costing. Required: 1. What is the per-unit inventory cost that is acceptable for reporting on Borquess balance sheet at the end of the year ? How many units are in ending inventory? What is the total cost of ending inventory? 2. Calculate absorption-costing operating income. 3. CONCEPTUAL CONNECTION What would the per-unit inventory cost be under variable costing? Does this differ from the unit cost computed in Requirement 1? Why? 4. Calculate variable-costing operating income. 5. Suppose that Borques Company had sold 196,700 pallets during the year. What would absorption-costing operating income have been? Variable-costing operating income?
Refer to Cornerstone Exercise 18.3. Required: 1. Calculate the cost of each unit using variable costing. 2. How many units remain in ending inventory? What is the cost of ending inventory using variable costing? 3. Prepare a variable-costing income statement for Pattison Products, Inc., for the month of October. 4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of ending inventory? What is operating income for November?
Grainger Company produces only one product and sells that product for $100 per unit. Cost information for the product is: Selling expenses are $4 per unit and are all variable. Administrative expenses of $20,000 are all fixed. Grainger produced 5,000 units; sold 4,000; and had no beginning inventory. A. Compute net income under absorption costing variable costing B. Reconcile the difference between the income under absorption and variable costing.
Both Austin Company and Hill Company had the same unit sales, total costs, and income from operations for the current fiscal year; yet, Austin Company had a lower break-even point than Hill Company. Explain the reason for this difference in break-even points.
Appendix Absorption costing income statement On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable existing concept: Sales (420,000 units) 7,450,000 Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x 14 per unit) 7,000,000 Less ending inventory (80,000 units x 14 per unit) 1,120,000 Variable cost of goods sold 5,880,000 Manufacturing margin 1,570,000 Variable selling and administrative expenses 80,000 Contribution margin 1,490,000 Fixed costs: Fixed manufacturing costs 160,000 Fixed selling and administrative expenses 75,000 235,000 Income from operations 1,255,000 a. Prepare an absorption costing income statement. b. Reconcile the variable costing income from operations of 1,255,000 with the absorption costing income from operations determined in (a).
Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: It is expected that 12,000 units will be sold at a price of 240 a unit. Maximum sales within the relevant range are 18,000 units. Instructions 1. Prepare an estimated income statement for 20Y7. 2. What is the expected contribution margin ratio? 3. Determine the break-even sales in units and dollars. 4. Construct a cost-volume-profit chart indicating the break-even sales. 5. What is the expected margin of safety in dollars and as a percentage of sales? (Round to one decimal place.) 6. Determine the operating leverage.
T3-7 Variable costing versus absorption costing (LO 1, 2) The following data were prepared by the Waco Wagon Company. Total Variable Fixed Sales price $20/unit Direct materials used $ 90,000 Direct labor $ 99,000 Manufacturing overhead $ 90,000 $ 9,000 $81,000 Selling and administrative expense $ 23,000 $14,000 $ 9,000 Units manufactured 18,000 units Beginning Finished Goods Inventory 20,000 units Ending Finished Goods Inventory 24,000 units Required a.Under absorption costing, what is the unit product cost? b.Under variable costing, what is the unit product cost? c.Under absorption costing, what is the cost of goods sold? d.Under variable costing, what is the cost of goods sold? e.Under absorption costing, what is the operating income? f.Under variable costing, what is the operating income? g.Reconcile the difference in operating income under absorption costing versus variable costing.
T3-6 Variable versus absorption costing (LO 1, 2) Regal Printing, Inc., prints and binds encyclopedias. The following information was found in the accounting records: Sales price per unit $ 103 Direct materials per unit $ 50 Direct labor per unit $ 16 Variable overhead per unit $ 10 Fixed overhead per unit $ 23 Fixed selling costs $ 55,000 Variable selling costs $180,000 Beginning inventory 0 Units produced 100,000 Units sold 90,000 Questions a.Under absorption costing, what is Regal's operating income? b.Under variable costing, what is Regal's ending Finished Goods Inventory balance?
Subject: Cost management & accounting Question No. 3: Absorption and Marginal Costing (remaining part)The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:Beginning inventory 0Units produced 10,000Units sold 8,000Selling price per unit $50Selling and administrative expenses:Variable per unit $5Fixed per year $60,000Manufacturing costs:Direct materials cost per unit $10Direct labor cost per unit $6Variable manufacturing overhead cost per unit $5Fixed manufacturing overhead per year $80,000Assume that direct labor is a variable cost.Required: (remaining part) b. Reconcile the absorption costing and variable costing net operating income figuresa. Prepare an income statement for the year using absorption costing and variable costing
Subject: Cost management & accounting Question No. 3: Absorption and Marginal CostingThe Dorset Corporation produces and sells a single product. The following data refer to the year just completed:Beginning inventory 0Units produced 10,000Units sold 8,000Selling price per unit $50Selling and administrative expenses:Variable per unit $5Fixed per year $60,000Manufacturing costs:Direct materials cost per unit $10Direct labor cost per unit $6Variable manufacturing overhead cost per unit $5Fixed manufacturing overhead per year $80,000Assume that direct labor is a variable cost.Required:a. Prepare an income statement for the year using absorption costing and variable costingb. Reconcile the absorption costing and variable costing net operating income figures
Revenue and cost details for a company’s single product are as follows: BWP per unit BWP per unitSales price 27Variable cost 15Fixed cost 8 (23) Profit 4 Fixed costs are absorbed based on the company’s normal activity, which is also thecompany’s budgeted sales value for each period. Last period there were no changes ininventory and the company achieved a margin of safety of 20% of the actual sales volume.Fixed costs were over-absorbed by P2,400.Required:a. Calculate the breakeven point in units for each period.