Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 7, Problem 3E
Reconciliation of Absorption and Variable Costing Net Operating Incomes L07—3
Jorgansen Lighting; Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internalmanagement reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided thefollowing data:
The company’s fixed manufacturing
Required:
1. Calculate each year’s absorption costing net operating income. Present your answer in the form of a reconciliation report.
2. Assume in Year 4 that the company’s variable costing net operating income was $984,400 and its absorption costing net operatingincome was $1,012,400.
a. Did inventories increase or decrease during Year 4?
b. How much fixed
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Reconciliation of Absorption and Variable Costing Net Operating Incomes
Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data:
The company’s fixed manufacturing overhead per unit was constant at $560 for all three years.
Required:
1. Calculate each year’s absorption costing net operating income. Present your answer in the form of a reconciliation report.
2. Assume in Year 4 that the company’s variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012,400.
a. Did inventories increase or decrease during Year 4?
b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?
ch7q39
Units Sold to Break Even, Unit Variable Cost, Unit Manufacturing Cost, Units to Earn Target Income
Werner Company produces and sells disposable foil baking pans to retailers for $2.95 per pan. The variable cost per pan is as follows:
Direct materials
$0.22
Direct labor
0.56
Variable factory overhead
0.70
Variable selling expense
0.13
Fixed manufacturing cost totals $303,290 per year. Administrative cost (all fixed) totals $41,358.
Required:
1. Compute the number of pans that must be sold for Werner to break even. pans
2. Conceptual Connection: What is the unit variable cost? What is the unit variable manufacturing cost? Round your answers to the nearest cent.
Unit variable cost
$
Unit variable manufacturing cost
$
Which is used in cost-volume-profit analysis?Unit variable cost
3. How many pans must be sold for Werner to earn operating income of $11,524? pans
4. How much sales revenue must Werner have to earn operating income 11524$
solve the given mcqs:
Truo Corporation produces a single product. Last year, the company had net operating income of $100,000 using variable costing. Beginning and ending inventories were 13,000 units and 18,000 units, respectively. If the fixed manufacturing overhead cost was $4 per unit both last year and this year, what would have been the net operating income using absorption
costing?
A
$120,000
B
$80,000
C
$100,000
D
$172,000
2) Elison Corporation, which has only one product, has provided the following data concerning its most recent month of operations:
Selling price
$
111
Units in beginning inventory
0
Units produced
7,500
Units sold
7,200
Units in ending inventory
300
Variable costs per unit:
Direct materials
$
24
Direct labor
$
34
Variable manufacturing overhead
$
1
Variable selling and administrative expense
$
5
Fixed costs:
Fixed manufacturing overhead
$
217,500
Fixed…
Chapter 7 Solutions
Introduction To Managerial Accounting
Ch. 7 - What is the difference between absorption costing...Ch. 7 - Are selling and administrative expenses treated as...Ch. 7 - Explain how fixed manufacturing overhead costs are...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - Prob. 6QCh. 7 - If the units produced exceed the units sold, which...Ch. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - How does Lean Production reduce or eliminate the...
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Distinguish between a traceable fixed cost and a...Ch. 7 - Explain how the contribution margin differs from...Ch. 7 - Why aren’t common fixed costs allocated to...Ch. 7 - How is it possible for a fixed cost that ¡s...Ch. 7 - Should a company allocate its common fixed costs...Ch. 7 - Prob. 1AECh. 7 - Prob. 2AECh. 7 - Prob. 3AECh. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 2F15Ch. 7 - Prob. 3F15Ch. 7 - Prob. 4F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 6F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 8F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 10F15Ch. 7 - Prob. 11F15Ch. 7 - Prob. 12F15Ch. 7 - Prob. 13F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 1ECh. 7 - Variable Costing Income Statement; Explanation of...Ch. 7 - Reconciliation of Absorption and Variable Costing...Ch. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Deducing Changes ¡n Inventories LO7—3 Parker...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Prob. 10ECh. 7 - Segmented Income Statement L07—4 Wingate Company,...Ch. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Variable Costing Unit Product Cost and Income...Ch. 7 - Absorption Costing Unit Product Cost and Income...Ch. 7 - Working with a Segmented Income Statement;...Ch. 7 - Prob. 17ECh. 7 - Prob. 18PCh. 7 - Variable Costing Income Statement; Reconciliation...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Segment Reporting and Decision-Making L07—4 Vulcan...Ch. 7 - Prob. 22PCh. 7 - Absorption and Variable Costing; Production...Ch. 7 - Companywide and Segment Break-Even Analysis;...Ch. 7 - Prepare and Interpret Income Statements; Changes...Ch. 7 - Prob. 26PCh. 7 - Variable and Absorption Costing Unit Product Costs...
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