Costing methods and variances, comprehensive. Rob Kapito, the controller of Blackstar Paint Supply Company, has been exploring a variety of internal accounting systems. Rob hopes to get the input of Blackstar’s board of directors in choosing one. To prepare for his presentation to the board, Rob applies four different cost accounting methods to the firm’s operating data for 2017. The four methods are actual absorption costing, normal absorption costing, standard absorption costing, and standard variable costing. With the help of a junior accountant, Rob prepares the following alternative income statements:
Where applicable, Rob allocates both fixed and variable manufacturing
- 1. Match each method below with the appropriate income statement (A, B, C, or D):
Required
Actual Absorption costing | _____ |
Normal Absorption costing | _____ |
Standard Absorption costing | _____ |
Standard Variable costing | _____ |
- 2. During 2017, how did Blackstar’s level of finished-goods inventory change? In other words, is it possible to know whether Blackstar’s finished-goods inventory increased, decreased, or stayed constant during the year?
- 3. From the four income statements, can you determine how the actual volume of production during the year compared to the denominator (expected) volume level?
- 4. Did Blackstar have a favorable or unfavorable variable overhead spending variance during 2017?
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EBK HORNGREN'S COST ACCOUNTING
- The chief executive officer of Acadia, Inc. attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that the following data of Acadia, Inc. be used to prepare comparative statements using variable costing and the companys absorption costing. The data follow: The factory produced 80,000 units during the period, and 70,000 units were sold for 700,000. 1. Prepare an income statement using variable costing. 2. Prepare an income statement using absorption costing. (Round unit costs to three decimal places.)arrow_forwardPlease help me with the functions needed to populate the correct answers in the highlighted areas. Thank you! Accessibility tab summary: Financial information for Patterson Incorporated, is presented in cells A4 to G14 and rows 16 to 17. A statement of requirement is presented in rows 19 to 24. A table for Standard Cost Variance Analysis - Direct Materials for student presentation is presented in cells A26 to B29 and A31 to C32. A table for Standard Cost Variance Analysis - Variable Manufacturing Overhead for student presentation is presented in cells A43 to B45 and A47 to C48. A statement of requirement is presented in row 50. A table for student presentation is presented in cell A52 to E62. Standards for one of Patterson, Inc.'s products is shown below, along with actual cost data for the month: Direct materials: Standard 2.4 yards @ $2.75 per yard $6.60 Actual 3.0 yards @ $2.70 per yard $8.10 Direct…arrow_forwardWright Brothers is debating the use of direct labor cost or direct labor hours as the cost allocation base for allocating manufacturing overhead. The following information is available for the year ended Dec 31, 2007. Estimated labor cost $449,500 Actual direct labor cost $441,000 Estimated manufacturing overhead $359,600 Actual manufacturing overhead costs $338,000 Actual direct labor hours $242,000 Using direct labour hours as the cost driver, the journal entry to dispose of the manufacturing overhead variance is: Select one: a. Dr. Manufacturing Overhead $14,800 and Cr. COGS $14,800 b. Dr. Manufacturing overhead $12,900 and Cr. COGS $12,900 c. Dr. COGS $14,800 and Cr. Manufacturing Overhead $14,800 d. Dr. WIP $12,900 and Cr. Manufacturing Overhead $12,900arrow_forward
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