Question

Osawa, Inc., planned and actually manufactured 260,000 units of its single product in2017 , its first year of operation. Variable manufacturing cost was $26 per unit produced. Variable operating (nonmanufacturing) cost was $11 per unit sold. Planned and actual fixed manufacturing costs were $ 520,000. Planned and actual fixed operating (nonmanufacturing) costs totaled $ 370000. Osawa sold 180,000 units of product at $ 44 per unit.

Requirement 1. Osawa 's 2017 operating income using absorption costing is (a) $ 530,000 , (b) $ 370,000 , (c) $ 740,000 , (d) $900,000, or (e) none of these. Show supporting calculations.

Begin by selecting the labels used in the absorption costing calculation of operating income and enter the supporting amounts. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) calculations.

                                   

                                                                                Absorption costing

                                      Revenues

                                   Cost of goods sold

                                   Beginning inventory

                                  Variable manufacturing

                                 Allocated fixed manufacturing

                                  Cost of goods available for sale

                                  Deduct ending inventory

                                Cost of goods sold                                                           

                                 Variable operating

                                Fixed operating

                        

                             Operating costs

                                                        

2.requirement Osawa 's 2017operating income using variable costing is (a) $ 890,000 , (b) $ 530,000 , (c) $ 370,000 , (d) $ 740,000 , or (e) none of these. Show supporting calculations.

variable costing

  

                                  Revenues    

                                   Cost of goods sold

                                   Beginning inventory

                                  Variable manufacturing

                                  Allocated fixed manufacturing

                                  Cost of goods available for sale

                                  Deduct ending inventory

Cost of goods sold                                                            

                                 Variable operating

                                Fixed operating

operating income

Answer 1

Absorption costing net income= 530000

Variable costing net income= 370000

Workings:

Absorption costing
Particulars	Total
Sales	79,20,000
Cost of goods sold	50,40,000
Gross margin	28,80,000
Expenses
Variable operating expenses	19,80,000
Fixed operating expenses	3,70,000
Total non operating expenses	23,50,000
Net income	5,30,000

	Per unit	Units	Amount
Beginning inventory			-
Variable manufacturing overhead	26	2,60,000	67,60,000
Fixed manufacturing overhead			5,20,000
Cost of goods available for sale			72,80,000
Less ending inventory			22,40,000
Cost of goods sold			50,40,000
Particulars	Per unit	Total units	Total
Units sold		1,80,000
Variable manufacturing cost	26	1,80,000	46,80,000
Fixed manufacturing cost	2	1,80,000	3,60,000
Cost of goods sold	28	1,80,000	50,40,000
Ending inventory	28	80,000	22,40,000
Fixed manufacturing cost	Amount
Estimated total cost	5,20,000
Total production	2,60,000
per unit fixed manufacturing cost	2

Variable costing income statement:

Particulars	Per unit	Total
Sales	44	79,20,000
Varible expenses
Manufacturing expenses	26	46,80,000
Non operating expenses	11	19,80,000
Total variable expenses	37	66,60,000
Contribution margin	7	12,60,000
Fixed expenses
Manufacturing expenses		5,20,000
Non operating expenses		3,70,000
Total fixed expenses		8,90,000
Net income		3,70,000