MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
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Textbook Question
Chapter 6, Problem 1PSA
Dowell Company produces a single product, its income statement under absorption costing for its first two year of operation follow.
| 2014 | 2015 | |
| 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 date for these first two years follow:
| 2014 | 2015 | |
| Units produced | 30,000 | 30,000 |
| Units sold | 20,000 | 40,000 |
- Variable cost per unit and total fixed costs are unchanged during 2014 and 2015. The company’s 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.
| 2014 | 2015 | |
| Variable selling and administrative expenses ($250 per unit) | $50,000 | $100,000 |
| Fixed selling and administrative expenses | 240,000 | 240,000 |
| Total selling and administrative expenses | $290,000 | $340,000 |
Required
- Prepare income statements for the company for each of its first two year under variable costing.
- Explain any difference between the absorption costing income and the variable costing income for these two years.
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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…
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year
follows:
Whitman Company
Income Statement
Sales (40,000 units x $44.60 per unit)
Cost of goods sold (40,000 units x $22 per unit)
Gross margin
Selling and administrative expenses
Net operating income
$ 1,784,000
880,000
904,000
460,000
$ 444,000
The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $4 per unit sold in variable
expenses. The $22 unit product cost given above is computed as follows:
Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead ($180,000 + 45,000 units)
Absorption costing unit product cost
Required:
$ 10
5
3
4
$ 22
1. Redo the company's income statement in the contribution format using variable costing.
2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating
income on the absorption…
ed
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of
operation follow.
Income Statements (Absorption
Costing)
Sales ($60 per unit)
Year 1
$
Year 2
$
1,920,000 3,960,000
Cost of goods sold ($45 per unit) 1,440,000 2,970,000
Gross profit
480,000
990,000
Selling and administrative
expenses
ok
Income
t
338,000 474,000
$ 142,000 $ 516,000
Additional Information
a. Sales and production data for these first two years follow.
Year 1 Year 2
nces
Units
Units
produced
49,000
49,000
Units sold 32,000 66,000
b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $45 per unit
product cost using absorption costing consists of the following.
Direct materials
Direct labor
$ 12
19
Variable overhead
Fixed overhead ($539,000/49,000
units)
3
11
Total product cost per unit
$ 45
c. Selling and administrative expenses consist of the following.
Selling and Administrative Expenses
Variable selling and…
Chapter 6 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
Ch. 6 - Prob. 1MCQCh. 6 - Prob. 2MCQCh. 6 - Prob. 3MCQCh. 6 - Prob. 4MCQCh. 6 - Prob. 5MCQCh. 6 - Prob. 1DQCh. 6 - Prob. 2DQCh. 6 - Prob. 3DQCh. 6 - Prob. 4DQCh. 6 - Prob. 5DQ
Ch. 6 - Prob. 6DQCh. 6 - Prob. 7DQCh. 6 - Prob. 8DQCh. 6 - Prob. 9DQCh. 6 - Prob. 10DQCh. 6 - Prob. 11DQCh. 6 - Prob. 12DQCh. 6 - Prob. 13DQCh. 6 - Prob. 14DQCh. 6 - Prob. 1QSCh. 6 - Prob. 2QSCh. 6 - Prob. 3QSCh. 6 - Prob. 4QSCh. 6 - Prob. 5QSCh. 6 - Prob. 6QSCh. 6 - Prob. 7QSCh. 6 - Prob. 8QSCh. 6 - Prob. 9QSCh. 6 - Prob. 10QSCh. 6 - Prob. 11QSCh. 6 - Prob. 12QSCh. 6 - Prob. 13QSCh. 6 - Prob. 14QSCh. 6 - Prob. 15QSCh. 6 - Prob. 16QSCh. 6 - Prob. 17QSCh. 6 - Prob. 18QSCh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Sims Company, a manufacturer of table computers,...Ch. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Prob. 7ECh. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - A recent annual report for McDonalds reports the...Ch. 6 - Dowell Company produces a single product, its...Ch. 6 - Trez Company began operations this year. During...Ch. 6 - Prob. 3PSACh. 6 - Prob. 1PSBCh. 6 - Prob. 2PSBCh. 6 - Prob. 3PSBCh. 6 - (This serial problem began in Chapter 1 and...Ch. 6 - Apples coding inventory amounts (in $ millions)...Ch. 6 - Prob. 2BTNCh. 6 - Prob. 3BTNCh. 6 - Prob. 4BTNCh. 6 - Prob. 5BTNCh. 6 - Prob. 6BTNCh. 6 - Happy Family Brands, which was launched by...Ch. 6 - Prob. 8BTNCh. 6 - Prob. 9BTN
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