COST ACCOUNTING TTU >IC<
17th Edition
ISBN: 9781323409046
Author: Horngren
Publisher: PEARSON
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Chapter 9, Problem 9.35P
Comparison of variable costing and absorption costing. Gammaro Company uses
- 1. At what percentage of denominator level was the plant operating during 2017?
- 2. How much fixed manufacturing overhead was included in the 2016 and the 2017 ending inventory under absorption costing?
- 3. Reconcile and explain the difference in 2017 operating incomes under variable and absorption costing.
- 4. Tim Sweeney is concerned: He notes that despite an increase in sales over 2016, 2017 operating income has actually declined under absorption costing. Explain how this occurred.
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Students have asked these similar questions
Magic Me is a manufacturer of magic kits. It uses absorption costing based on standard costs and reports the following data for 2017:
There are no price, spending, or efficiency variances. Actual operating costs equal budgeted operating costs. The production-volume variance is written off to cost of goods sold. For each choice of denominator level, the budgeted production cost per unit is also the cost per unit of beginning inventory
Q. Prepare absorption costing–based income statements for Magic Me Corporation using theoretical capacity, practical capacity, and normal capacity utilization as the denominator levels.
Techno
Instruments uses a manufacturing costing system with one direct-cost category (direct materials) and three indirect-cost categories:
a.
Setup, production-order, and materials-handling costs that vary with the number of batches
b.
Manufacturing-operations costs that vary with machine-hours
c.
Costs of engineering changes that vary with the number of engineering changes made
In response to competitive pressures at the end of
2016,
Techno
Instruments used value-engineering techniques to reduce manufacturing costs. Actual information for
2016
and
2017
is as follows:
2016
2017
Setup, production-order, and materials-handling costs per batch
$8,600
$7,800
Total manufacturing-operations cost per machine-hour
$59
$53
Cost per engineering change
$18,750
$14,000
The management of Techno Instruments wants to evaluate whether value engineering has succeeded in reducing the target manufacturing cost per unit of one…
Magic Me is a manufacturer of magic kits. It uses absorption costing based on standard costs and reports the following data for 2017:
There are no price, spending, or efficiency variances. Actual operating costs equal budgeted operating costs. The production-volume variance is written off to cost of goods sold. For each choice of denominator level, the budgeted production cost per unit is also the cost per unit of beginning inventory
Q. Reconcile the difference in operating income based on theoretical capacity and practical capacity with the difference in fixed manufacturing overhead included in inventory.
Chapter 9 Solutions
COST ACCOUNTING TTU >IC<
Ch. 9 - Differences in operating income between variable...Ch. 9 - Why is the term direct costing a misnomer?Ch. 9 - Do companies in either the service sector or the...Ch. 9 - Explain the main conceptual issue under variable...Ch. 9 - Companies that make no variable-cost/fixed-cost...Ch. 9 - The main trouble with variable costing is that it...Ch. 9 - Give an example of how, under absorption costing,...Ch. 9 - What are the factors that affect the breakeven...Ch. 9 - Critics of absorption costing have increasingly...Ch. 9 - What are two ways of reducing the negative aspects...
Ch. 9 - Prob. 9.11QCh. 9 - Describe the downward demand spiral and its...Ch. 9 - Will the financial statements of a company always...Ch. 9 - Prob. 9.14QCh. 9 - The difference between practical capacity and...Ch. 9 - In comparing the absorption and variable cost...Ch. 9 - Queen Sales, Inc. has just completed its first...Ch. 9 - King Tooling has produced and sold the following...Ch. 9 - The following information relates to Drexler Inc.s...Ch. 9 - Prob. 9.20MCQCh. 9 - Variable and absorption costing, explaining...Ch. 9 - Throughput costing (continuation of 9-21). The...Ch. 9 - Variable and absorption costing, explaining...Ch. 9 - Throughput costing (continuation of 9-23). The...Ch. 9 - Variable versus absorption costing. The Tomlinson...Ch. 9 - Absorption and variable costing. (CMA) Miami,...Ch. 9 - Absorption versus variable costing. Horace Company...Ch. 9 - Candyland uses standard costing to produce a...Ch. 9 - Capacity management, denominator-level capacity...Ch. 9 - Denominator-level problem. Thunder Bolt Inc., is a...Ch. 9 - Variable and absorption costing and breakeven...Ch. 9 - Variable costing versus absorption costing. The...Ch. 9 - Throughput Costing (continuation of 9-32) 1....Ch. 9 - Variable costing and absorption costing, the Z-Var...Ch. 9 - Comparison of variable costing and absorption...Ch. 9 - Effects of differing production levels on...Ch. 9 - Alternative denominator-level capacity concepts,...Ch. 9 - Motivational considerations in denominator-level...Ch. 9 - Denominator-level choices, changes in inventory...Ch. 9 - Variable and absorption costing and breakeven...Ch. 9 - Downward demand spiral. Market.com is about to...Ch. 9 - Absorption costing and production-volume...Ch. 9 - Operating income effects of denominator-level...Ch. 9 - Variable and absorption costing, actual costing....Ch. 9 - Prob. 9.45PCh. 9 - Cost allocation, responsibility accounting, ethics...Ch. 9 - Absorption, variable, and throughput costing....Ch. 9 - Costing methods and variances, comprehensive. Rob...
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