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In: Accounting
Alta Products Ltd. has just created a new division to manufacture and sell DVD players. The...
Alta Products Ltd. has just created a new division to manufacture and sell DVD players. The facility is highly automated and thus has high monthly fixed costs, as shown in the following schedule of budgeted monthly costs. This schedule was prepared based on an expected monthly production volume of 2,000 units. Manufacturing costs Variable costs per unit Direct materials $ 30 Direct labour 40 Variable overhead 10 Total fixed overhead 70,000 Selling and administrative costs Variable 6% of sales Fixed $50,000 During August 2020, the following activity was recorded: Units produced 2,000 Units sold 1,700 Selling price per unit $ 175 Instructions
a. Prepare an income statement for the month ended August 31, 2020, under absorption costing. Net income $34,150
b. Prepare an income statement for the month ended August 31, 2020, under variable costing. Net income $23,650
c. Reconcile the absorption-costing and variable-costing income figures for the month.
d. Prepare an income statement for the month ended August 31, 2020, under throughput costing.
e. Reconcile the variable-costing income and throughput-costing income figures for the month.
f. What are some of the arguments in favour of using variable costing? What are some of the arguments in favour of using absorption costing?
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables,...
Zurgot Inc. has just organized a new division to manufacture and
sell specially designed computer tables, using select hardwoods.
The division’s monthly costs are shown in the schedule below:
Manufacturing costs:
Variable costs per unit:
Direct
materials
$
192
Variable
manufacturing overhead
$
19
Fixed manufacturing overhead
costs (total)
$
500,850
Selling and administrative costs:
Variable
15
% of sales
Fixed (total)
$
343,440
Zurgot regards all of its workers as full-time employees, and
the company has a long-standing...
Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables,...
Zurgot Inc. has just organized a new division to manufacture and
sell specially designed computer tables, using select hardwoods.
The division’s monthly costs are shown in the schedule below:
Manufacturing costs:
Variable costs per unit:
Direct
materials
$
192
Variable
manufacturing overhead
$
17
Fixed manufacturing overhead
costs (total)
$
561,105
Selling and administrative costs:
Variable
15
% of sales
Fixed (total)
$
272,970
Zurgot regards all of its workers as full-time employees, and
the company has a long-standing...
Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables,...
Zurgot Inc. has just organized a new division to manufacture and
sell specially designed computer tables, using select hardwoods.
The division’s monthly costs are shown in the schedule below:
Manufacturing costs:
Variable costs per unit:
Direct
materials
$
192
Variable
manufacturing overhead
$
17
Fixed manufacturing overhead
costs (total)
$
561,105
Selling and administrative costs:
Variable
15
% of sales
Fixed (total)
$
272,970
Zurgot regards all of its workers as full-time employees, and
the company has a long-standing...
Escuchar Products, a producer of DVD players, has established a labor standard for its product—direct labor:...
Escuchar Products, a producer of DVD players, has established a
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hour. During January, Escuchar produced 14,600 DVD players. The
actual direct labor used was 43,240 hours at a total cost of
$391,322.
1. Compute the labor rate and efficiency variances.
2. Prepare journal entries on Jan. 31 for all activities
relating to labor. Refer to the Chart of Accounts for the exact
wording of account titles.
JOURNAL:
DATE
ACCOUNT...
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compete on price: the low price seller gets all the market, and
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Coco-True Ltd expects to manufacture and sell lady’s shoes. It
has the following information for its 2021 budget.
Sales price of a pair of shoes is $100.
Product costs per pair of shoes:
Direct materials (2 metres @ $15)
$30.00
Direct labour (1 hour @ 15.00)
$15.00
Overheads
$5.00
$50.00
Budgeted sales for the second six month period are:
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A company has just built a new factory to manufacture
their widgets with a method they believe should be more efficient
than their old method on a daily basis. To compare they recorded
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their widgets with a method they believe should be more efficient
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days before it was shutdown and the first 9 days of the new
factory's production. The company has reason to believe that daily
production of widgets does not follow the normal distribution and
have...
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determined the company will sell 46,000 sets per year for seven
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lose sales of 12,000 sets of its high-priced clubs. The high-priced
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