MANAGERIAL ACCT.F/MANAGERS>CUSTOM<
4th Edition
ISBN: 9781307090147
Author: Noreen
Publisher: MCG/CREATE
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Chapter 5A, Problem 5A.3E
Super-Variable Costing and Variable Costing Unit Product Costs and Income Statements LO4—2. LO4—6
Kelly Company manufactures and sells one product. The following information pertains to each of the company’s first two years of operations:
The company does not incur any variable
Required:
- Assume the company uses super-variable costing:
- Compute the unit product cost for Year 1 and Year 2.
- Prepare an income statement for Year 1 and Year 2.
- Assume the company uses a variable costing system that assigns $10 of direct labor cost to each unit produced:
- Compute the unit product cost for Year 1 and Year 2.
- Prepare an income statement for Year 1 and Year 2.
- Prepare a reconciliation that explains the difference between the super-variable costing and variable costing net operating incomes in Years 1 and 2.
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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 7–18 Relevant Cost Analysis in a Variety of Situations [LO 7–2, LO 7–3, LO 7–4]Andretti Company has a single product called a Dak. The company normally produces and sells 60,000 Daks each year at a selling price of $32 per unit. The company’s unit costs at this level of activity are given below:
Direct materials................................$10.00
Direct labor ...................................4.50
Variable manufacturing overhead................2.30
Fixed manufacturing overhead ..................5.00($300,000 total)
Variable selling expenses.......................1.20
Fixed selling expenses ......................... 3.50($210,000 total)
Total cost per unit..............................$26.50
1. Assume that Andretti Company has sufficient capacity to produce 90,000 Daks each year without any increase in fixed manufacturing overhead costs. The company could increase its sales by 25% above the present 60,000 units each year if it were willing to increase the fixed selling…
Exercise 6-5 Changes in Variable Costs, Fixed Costs, Selling Price, and Volume [LO6-4]
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[The following information applies to the questions displayed below.]
Data for Hermann Corporation are shown below:
Per Unit
Percent of Sales
Selling price
$
125
100
%
Variable expenses
80
64
Contribution margin
$
45
36
%
Fixed expenses are $85,000 per month and the company is selling 2,700 units per month.
rev: 06_04_2020_QC_CS-205709, 06_18_2020_QC_CS-216765, 07_14_2020_QC_CS-216765
Exercise 6-5 Part 1
Required:
1-a. How much will net operating income increase (decrease) per month if the monthly advertising budget increases by $9,000 and monthly sales increase by $20,000?
1-b. Should the advertising budget be increased?
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