Question

Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of $450, and incurred the following manufacturing costs:

Direct Materials = $40 per unit

Direct Labor = $18 per unit

Factory overhead costs:

Variable Factory Overhead = $23 per unit

Fixed Factory overhead = $250,000

Semi-variable Factory overhead cost is $70,000. The company utilized 14,000 machine hours during this period. The following additional information is provided semi-variable factory overhead into variable and fixed factory overhead costs, using high-low method.

Cost machine hours

Jan $52,000 10,000

Feb $54,000 11,000

Mar $77,000 20,000

April $67,000 12,500

Selling and Administrative expenses information:

Variable Selling and Administrative Expenses = $22 per unit

Fixed Selling and Administrative Expenses= $122,000.

Questions:

• Absorption costing income statement

• Explain the difference between the operating income and the absorption costing income statement?

• what caused the difference?

Answer 1

1)
	Varibale Costing Income Statement	90,000 Units Sold
	Particulars	Per Unit			Amount ($)
	Sales	450.00	[90,000 x 450.00]		40500000
	Less: Cost of Goods Sold :-
	Opening Inventory		-	-
	Add: Variable cost of goods sold	81.35	[1,00,000 x 81.35]	8,135,000
	- Direct Materials                = 40.00
	- Direct Labour                    = 18.00
	- Variable Overhead            = 23.00
	- Semi Variable Mfg. OH     =    0.35
	Variable selling & admin exp.	22.00	[90,000 x 22.00]	1,980,000
	Less: Closing Inventory		[10,000 x 81.35]	813,500	9301500
	Contribution Margin				31198500
	Less: Fixed costs
	Fixed Manufacturing overhead				250000
	Semi Fixed Manufacturing OH		[$70000 - $35000]		35000
	Selling & administrative exp.				122000
	Net operating income				30791500
		Jan	$52,000	10000
		Feb	$54,000	11000
		March	$77,000	20000
		April	$67,000	12500
	Variable Cost per unit	(Highest Activity Cost - Lowset Activity Cost)
		(Highest Activity Units - Lowset Activity Units)
	Variable Cost per unit	($77,000 - $52,000)
		(20,000 - 10,000)
	Variable Cost per unit	[$25,000]
		[10,000]
	Variable Cost per unit		$2.50
	at 14,000 Hours		[14000 x $ 2.50]
	at 14,000 Hours		$35,000
	Semi Variable Cost per unit		[$35000 / 100000]
	Semi Variable Cost per unit		$0.35
	Absorption Costing Income Statement	90,000 Units Sold
	Particulars	Per Unit			Amount ($)
	Sales	450.00	[90,000 x 450.00]		40500000
	Less: Cost of Goods Sold :-
	Opening Inventory		-	-
	Add: Variable cost of goods sold	81.35	[1,00,000 x 81.35]	8,135,000
	- Direct Materials                = 40.00
	- Direct Labour                    = 18.00
	- Variable Overhead            = 23.00
	- Semi Variable Mfg. OH    =    0.35
	Fixed cost of goods sold:	2.85	[1,00,000 x 2.85]	285,000
	- Fixed Mfg. OH                     =   2.50
	- Semi Fixed Mfg. OH          =    0.35
	Less: Closing Inventory		[10,000 x 84.20]	842,000	7578000
	Gross Profit				32922000
	Less: Selling & Admin Exp.
	Variable selling & admin exp.	22.00	[90,000 x 22.00]		1980000
	Fixed Selling & administrative exp.				122000
	Net operating income				30820000
				ekkarill92 Next > < Previous Related Solutions Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of... Easy Breeze company produced 100,000 units, sold 90,000 units at a selling price per unit of $450, and incurred the following manufacturing costs: Direct Materials = $40 per unit Direct Labor = $18 per unit Factory overhead costs: Variable Factory Overhead = $23 per unit Fixed Factory overhead = $250,000 Semi-variable Factory overhead cost is $70,000. The company utilized 14,000 machine hours during this period. The following additional information is provided semi-variable factory overhead into variable and fixed factory overhead... Beginning inventory 0   Units produced 27,000   Units sold 18,500   Selling price per unit $ 93   ... Beginning inventory 0   Units produced 27,000   Units sold 18,500   Selling price per unit $ 93      Selling and administrative expenses:      Variable per unit $ 3      Fixed (total) $ 518,000   Manufacturing costs:      Direct materials cost per unit $ 24      Direct labour cost per unit $ 14      Variable manufacturing overhead cost per unit $ 9      Fixed manufacturing overhead cost (total) $ 756,000 Since the new case is unique in design, management is anxious to see how profitable it will be and has... If 12,500 units are produced and sold, what is the variable cost per unit produced and sold? Martinez Company’s relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:  Average Cost Per UnitDirect materials$ 5.60Direct labor$ 3.10Variable manufacturing overhead$ 1.40Fixed manufacturing overhead$ 4.00Fixed selling expense$ 2.60Fixed administrative expense$ 2.20Sales commissions$ 1.20Variable administrative expense$ 0.454. If 12,500 units are produced and sold, what is the variable cost per unit produced and sold? (Round your answer to 2 decimal places.) Hi-Tek produced and sold 70,000 units of B300 at a price of $20 per unit and... Hi-Tek produced and sold 70,000 units of B300 at a price of $20 per unit and 17,500 units of T500 at a price of $40 per unit. The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base. Additional information relating to the company’s two product lines is shown below: Hi-Tek Manufacturing Inc. Income Statement Sales ……………………………………………………….. $2,100,000 Cost of goods sold ………………………………….. 1,600,000 Gross Margin ..……………............................... 500,000... 1. If 18,000 units are produced and sold, what is the variable cost per unit produced and sold? Refer to the data given in Exercise 1-7. Answer all questions independently.  Kubin Company's relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows:   Required: 1. If 18,000 units are produced and sold, what is the variable cost per unit produced and sold? 2. If 22,000 units are produced and sold, what is the variable cost per unit produced and sold? 3. If 18,000 units are... Currently, the sales of a company is $12,800,000 per year: price per unit $12.8; units sold... Currently, the sales of a company is $12,800,000 per year: price per unit $12.8; units sold 1,000,000 per year; direct cost per unit $9.60; A/R 25% of $ sales (ignore A/P); inventory 25% of direct cost; cash operating expense $890,000 per year; annual depreciation $600,000; tax rate 34%; capital expenditure is zero. Now you are estimating the free cash flow for the next year when the unit sales price changes to $15.36, thus changing $ sales; however, the number of... selling price $95 units in beginning inventory 100 units produced 6,200 units sold 5,900 units in... selling price $95 units in beginning inventory 100 units produced 6,200 units sold 5,900 units in ending inventory 400 variable cost per unit direct materials $42 direct labor $28 variable manufacturing overhead $1 variable selling and administrative $5 fixed costs fixed manufacturing overhead $62,000 fixed selling and administrative $35,400 Lee Corporation, which has only one product, has provided the following data concerning its most recent month of operations. The company produces the same number of units every month, although the... Well Balanced Company makes silver necklace at its Easy City facility. The selling price per unit... Well Balanced Company makes silver necklace at its Easy City facility. The selling price per unit is $80. It has the capacity to make 5,000 pieces without increasing fixed costs.                Current production is 4,000 units.                                                                     Cost per Unit                     Direct material $20                                        Direct labor 15                     Factory overhead -Variable             8                     Factory overhead - Fixed      7                                                                          Total Cost   $50               A business from Florida wants to buy 1,000 necklaces at $49               instead of $80.               Well... Price per Unit Variable Cost per Unit Units Sold per Year Basic $ 700 $ 220... Price per Unit Variable Cost per Unit Units Sold per Year Basic $ 700 $ 220 700 Retest 1,050 580 200 Vital 4,600 3,100 100 Variable costs include the labor costs of the medical technicians at the lab. Fixed costs of $490,000 per year include building and equipment costs and the costs of administration. A basic "unit" is a routine drug test administered. A retest is given if there is concern about the results of the first test, particularly if... CVP Analysis Data Unit sales     20,000 units Selling price per unit $60 per unit Variable... CVP Analysis Data Unit sales     20,000 units Selling price per unit $60 per unit Variable expenses per unit $45 per unit Fixed expenses $240,000 Enter a formula into each of the cells marked with a ? below Review Problem: CVP Relationships Compute the CM ratio and variable expense ratio Selling price per unit ? per unit Variable expenses per unit ? per unit Contribution margin per unit ? per unit CM ratio ? Variable expense ratio ? Compute the... ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions Write a C++ program that reads integers from standard input until end of file. Print out... Woo Audio is a small company in New York that makes high-quality headphone amplifiers. The company... How are users categorized? In Linux, which user has all the privileges? Why do we need... Force Table: If the center ring were to have considerable mass, what effect would it have... 1. Mark Welsch deposits $7,100 in an account that earns interest at an annual rate of... Can someone please explain to me what are the differences between Windows and Linux memory hierarchy,... Research a company that has had some consolidation with a foreign subsidiary and discuss whether that... ADVERTISEMENT About @ 2020 WizEdu