Managerial Accounting for Managers
4th Edition
ISBN: 9781259578540
Author: Eric Noreen, Peter C. Brewer Professor, Ray H Garrison
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 5A, Problem 5A.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
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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Inferring Costing Method; Unit Product Cost [LO6–1]
Sierra Company incurs the following costs to produce and sell a single product.
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During the last year, 25,000 units were produced and 22,000 units were sold. The Finished Goodsinventory account at the end of the year shows a balance of $72,000 for the 3,000 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 $72,000 figure for Finished Goods inventory the correct amount to use on these statements for external reporting purposes? Explain.b. At what dollar amount should the 3,000 units be carried in the inventory for externalreporting purposes?
TF 3
The following data was prepared by the Oriole Company.
Total
Variable
Fixed
Sales price
$22/unit
Direct materials used
$82,650
Direct labor
$96,000
Manufacturing overhead
$113,670
$17,910
$95,760
Selling and administrative expense
$22,700
$13,100
$9,600
Units manufactured
25,200 units
Beginning Finished Goods Inventory
19,200 units
Ending Finished Goods Inventory
7,000 units
Incorrect answer iconYour answer is incorrect.
Under absorption costing, what is the cost of goods sold? (Round cost per unit to 2 decimal places, e.g. 2.52 and final answer to 0 decimal place, e.g. 2,152.)
Cost of goods sold
$enter the cost of goods sold in dollars rounded to 0 decimal places
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subject-Accounting
Hanks recently produced & sold 2777 units. Fixed costs per unit at this level of activity amounted to $8; variable costs per unit were $9. How much total cost would the company anticipate if during the next period it produced & sold 6919 units? Note: assume this level is still within the relevant range
Round your final answer to 2 decimal places
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