CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
6th Edition
ISBN: 9781264445356
Author: Noreen
Publisher: MCG
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Chapter 4A, Problem 4A.5P
Super-Variable Costing, Variable Costing, and Absorption Costing Income Statements LO4—2, LO4—6
Bracey Company manufactures and sells one product. The following information pertains to the company’s first year of operations:
The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Bracey produced 20,000 units and sold 18,000 units. The selling price of the company’s product is $55 per unit.
Required:
- Assume the company uses super-variable costing:
- Compute the unit product cost for the year.
- Prepare an income statement for the year.
- Assume the company uses a variable costing system that assigns $12.50 of direct labor cost to each unit produced:
- Compute the unit product cost for the year.
- Prepare an income statement for the year.
- Assume the company uses an absorption costing system that assigns $12.50 of direct labor cost and $15.00 of fixed
manufacturing overhead cost to each unit produced: - Compute the unit product cost for the year.
- Prepare an income statement for the year.
- Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net operating incomes. Prepare another reconciliation that explains the difference between the super-variable costing and absorption costing net operating incomes.
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Required information
[The following information applies to the questions displayed below.]
Diego Company manufactures one product that is sold for $75 per unit in two geographic regions-the East and West
regions. The following information pertains to the company's first year of operations in which it produced 46,000 units and
sold 42,000 units.
Variable costs per unit:
Manufacturing:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative expense
Break even point
$ 25
$ 20
The company sold 31,000 units in the East region and 11,000 units in the West region. It determined that $200,000 of its
fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the
remaining $38,000 is a common fixed expense. The company will continue to incur the total amount of its fixed
manufacturing…
Q – 5:
Bettina Company incurs the following costs to produce and sell a single product.
Variable costs per unit:
Direct materials $15
Direct labor$7.5
Variable manufacturing overhead$3
Variable selling and administrative expenses$6
Fixed costs per year:
Fixed manufacturing overhead . . . . . . . . . . . . . . . . . $45,000
Fixed selling and administrative expenses . . . . . . . $150,000
During the last year, 15,000 units were produced and 12,500 units were sold. The Finished Goods inventory account at the end of the year shows a balance of $63,750 for the 2,500 unsold units.
Required:
1. Is the company using absorption costing or variable costing to cost units in the Finished Goods inventory account? Show computations to support your answer.
2. Assume that the company wishes to prepare financial statements for the year to issue to its stockholders.
a. Is the $63,750 figure for Finished Goods inventory the correct amount to use on these…
Problem 5 (Super-Variable Costing and Variable Costing Unit Product
Costs and Income Statements)
Lyns Company manufactures and sells one product. The following
information pertains to the company's first year of operations:
Variable cost per unit:
Direct materials
Fixed costs per year:
130
P7,500,000
P4,200,000
P1,100,000
Direct labor
Fixed manufacturing overhead
Fixed selling and administrative expenses
The company does not incur any variable manufacturing overhead costs or
variable selling and administrative expenses. During its first year of
operations, Lyns produced 60,000 units and sold 52,000 units. The selling
price of the company's product is P400 per unit.
Required:
1. Assume the company uses super-variable costing:
a. Compute the unit product cost for the year.
b. Prepare an income statement for the year.
2. Assume the company uses a variable costing system that assigns P125.00
of direct labor cost to each unit produced:
a. Compute the unit product cost for the year.
b.…
Chapter 4A Solutions
CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
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