EX 20-8 Estimated income statements, using absorption and variable costing Obj. 1, 2e Prior to the first month of operations ending October 31, Marshall Inc. estimated the followings, operating results:00Sales (40,000 x $90) .....Manufacturing costs (40,000 units):Direct materials..Direct labor .....Variable factory overhead .Fixed factory overhead...Fixed selling and administrative expenses.Variable selling and administrative expenses..s)$3,600,0001,440,000480,000DW240,000120,00075,000200,000The company is evaluating a proposal to manufacture 50,000 units instead of 40,000 units,thus creating an ending inventory of 10,000 units. Manufacturing the additional units will notchange sales, unit variable factory overhead costs, total fixed factory overhead cost, or totalselling and administrative expenses.A. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 unitsare manufactured in (1) the absorption costing format and (2) the variable costing format.В.What is the reason for the difference in income from operations reported for thetwo levels of production by the absorption costing income statement?

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A. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 units are manufactured in (1) the absorption costing format and (2) the variable costing format. В. What is the reason for the difference in income from operations reported for the two levels of production by the absorption costing income statement?

A. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 units are manufactured in (1) the absorption costing format and (2) the variable costing format. В. What is the reason for the difference in income from operations reported for the two levels of production by the absorption costing income statement?

Accounting

27th Edition

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Chapter21: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21.28EX: Appendix Absorption costing income statement On June 30, the end of the first month of operations,...

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Appendix Absorption costing income statement On June 30, the end of the first month of operations, Tudor Manufacturing Co. prepared the following income statement, based on the variable existing concept: Sales (420,000 units) 7,450,000 Variable cost of goods sold: Variable cost of goods manufactured (500,000 units x 14 per unit) 7,000,000 Less ending inventory (80,000 units x 14 per unit) 1,120,000 Variable cost of goods sold 5,880,000 Manufacturing margin 1,570,000 Variable selling and administrative expenses 80,000 Contribution margin 1,490,000 Fixed costs: Fixed manufacturing costs 160,000 Fixed selling and administrative expenses 75,000 235,000 Income from operations 1,255,000 a. Prepare an absorption costing income statement. b. Reconcile the variable costing income from operations of 1,255,000 with the absorption costing income from operations determined in (a).
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EX 21-8 Estimated income statements, using absorption and variable costing Obj. 1,2 Prior to the first month of operations ending October 31, Marshall Inc. estimated the following operating results: Sales (40,000 x $90) Manufacturing costs (40,000 units): Direct materials Direct labor....... Variable factory overhead. Fixed factory overhead.. Fixed selling and administrative expenses.. Variable selling and administrative expenses.... $3,600,000 1,440,000 480,000 240,000 120,000 75,000 200,000 The company is evaluating a proposal to manufacture 50,000 units instead of 40,000 units, thus creating an ending inventory of 10,000 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses. a. Prepare an estimated income statement, comparing operating results if 40,000 and 50,000 units are manufactured in (1) the absorption costing format and (2) the variable costing…
Question 01 A proforma cost sheet of a company provides the following particulars: |Elements of Cost Raw Materials Direct Labours Overheads Total cost Profit |Selling price Amount in Rs Per unit 140 60 70 270 30 300 Further particulars available are : Raw materials are in stock on average for one month. Materials are in process on an average for half a month. Finished goods are in stock on an average for one month. Credited allowed by suppliers is one month-credited allowed to customers is two months. Lag in payment of wages one and a half weeks.(1 ½ Weeks), Lag in payment of overhead expenses is one month. One fourth of the output is sold against cash. Cash in hand and at bank is expected to be Rs 50,000. You are required to prepare a statement showing the working capital needed to finance, a level of activity of 240,000 units of production. You may assume that production is carried on evenly throughout the year, wages and overhead accrue similarly and a time period of 4 weeks is…
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Part 1 The total costs and output volume of Example Ltd for the preceding six months are given in the following table: Month Output volume Total costs October 85,000 685,000 November 80,000 700,000 December 75,000 715,000 January 65,000 655,000 February 55,000 640,000 March 75,000 730,000 Required: Use the high-low method to express the cost function for the total monthly costs. The output volume expected to be produced in April is 60,000 units. Estimate the total cost in April. Explain whether you will use this cost function to predict the total costs for 82,000 units.
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Exercise 19-3 (Algo) Income statement under absorption costing and variable costing LO P1, P2 Skip to question [The following information applies to the questions displayed below.]Cool Sky reports the following for its first year of operations. The company produced 42,000 units and sold 34,000 units at a price of $120 per unit. Direct materials $ 48 per unit Direct labor $ 18 per unit Variable overhead $ 6 per unit Fixed overhead $ 420,000 per year Variable selling and administrative expenses $ 12 per unit Fixed selling and administrative expenses $ 110,000 per year Exercise 19-3 (Algo) 1b. Assume the company uses absorption costing. Prepare its income statement for the year under absorption costing. 2a. Assume the company uses variable costing. Determine its total product cost per unit. 2b. Assume the company uses variable costing. Prepare its income statement for the year under variable costing.
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EXERCISE 4-9 Variable and Absorption Costing Unit Product Costs and Income Statements L04-1, LO4-2, L04-3 Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: od t Variable costs per unit: Manufacturing: Direct materials Direct labor..... Variable manufacturing overhead Variable selling and administrative.. Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses...... $25 $15 $5 $2 $250,000 $80,000 d baimeingoe During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $60 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the…