White Water Rafting Company manufactures kayaks, which sell for $595 each. The variable costs of production...

White Water Rafting Company manufactures kayaks, which sell for $595 each. The variable costs of production (per unit) are as follows:

Direct Material $ 210

Direct labor 125

Variable manufacturing overhead 85

Budgeted fixed overhead in 20x1 was $423,000

and budgeted production was 47,000 kayaks.

The year’s actual production was 47,000 units, of which 38,500 were sold.

Variable selling and administrative costs were $6 per unit sold; fixed selling and administrative costs were $67,000.

Required:

A. Calculate the product cost per kayak under (a) absorption costing and (b) variable costing.

B. Prepare operating income statements for the year using (a) absorption costing and (b) variable costing.

C. Reconcile reported operating income under the two methods using the shortcut method.

Expert Solution

ekkarill92 answered 1 year ago

Great Outdoze Company manufactures sleeping bags, which sell for $66.10 each. The variable costs of production...

Great Outdoze Company manufactures sleeping bags, which sell for $66.10 each. The variable costs of production are as follows: Direct material $ 20.00 Direct labor 10.10 Variable manufacturing overhead 6.20 Budgeted fixed overhead in 20x1 was $232,000 and budgeted production was 29,000 sleeping bags. The year’s actual production was 29,000 units, of which 26,000 were sold. Variable selling and administrative costs were $1.30 per unit sold; fixed selling and administrative costs were $27,000. Required: 1. Calculate the product cost per...

Great Outdoze Company manufactures sleeping bags, which sell for $66.60 each. The variable costs of production...

Great Outdoze Company manufactures sleeping bags, which sell for $66.60 each. The variable costs of production are as follows: Direct material $ 18.30 Direct labor 11.00 Variable manufacturing overhead 7.40 Budgeted fixed overhead in 20x1 was $163,800 and budgeted production was 26,000 sleeping bags. The year’s actual production was 26,000 units, of which 24,000 were sold. Variable selling and administrative costs were $1.90 per unit sold; fixed selling and administrative costs were $29,000. Required: 1. Calculate the product cost per...

Great Outdoze Company manufactures sleeping bags, which sell for $67.00 each. The variable costs of production...

Great Outdoze Company manufactures sleeping bags, which sell for $67.00 each. The variable costs of production are as follows: Direct material $ 18.50 Direct labor 9.50 Variable manufacturing overhead 7.20 Budgeted fixed overhead in 20x1 was $169,400 and budgeted production was 22,000 sleeping bags. The year’s actual production was 22,000 units, of which 19,700 were sold. Variable selling and administrative costs were $2.10 per unit sold; fixed selling and administrative costs were $29,000. Required: 1. Calculate the product cost per...

Outdoors Company manufactures sleeping bags that sell for P30 each. The variable standard costs of production...

Outdoors Company manufactures sleeping bags that sell for P30 each. The variable standard costs of production are P19.50. Budgeted fixed manufacturing overhead is P100,000, and budgeted production is 10,000 sleeping bags. The company actually manufactured 12,500 bags, of which 11,000 were sold. There were no variances during the year except for the fixed-overhead volume variance. Variable selling and administrative costs are P0.50 per sleeping bag sold; fixed selling and administrative costs are P5,000. Required: Calculate the standard product cost per...

Krazy Kayaks manufactures kayaks. The company has automated production, so it allocates manufacturing overhead based on...

Krazy Kayaks manufactures kayaks. The company has automated production, so it allocates manufacturing overhead based on machine hours. Krazy expects to incur $240,000 of manufacturing overhead costs and to use 4,000 machine hours during 2015. At the end of 2014, Krazy reported the following inventories: Raw Materials Inventory $20,000 Work-in-Process Inventory $17,000 Finished Goods Inventory $11,000 During January 2015, Krazy used 300 machine hours and recorded the following transactions: Purchased materials on account, $31,000 Used direct materials, $39,000 Manufacturing wages...

Great Outdoze, Inc., manufactures high-quality sleeping bags, which sell for $65.50 each. The variable costs of...

Great Outdoze, Inc., manufactures high-quality sleeping bags, which sell for $65.50 each. The variable costs of production are as follows: Direct material $ 18.70 Direct labor 9.50 Variable manufacturing overhead 6.10 Budgeted fixed overhead in 20x4 was $158,600 and budgeted production was 26,000 sleeping bags. The year’s actual production was 26,000 units, of which 23,300 were sold. Variable selling and administrative costs were $1.30 per unit sold; fixed selling and administrative costs were $24,000. Required: 1. Calculate the product cost...

Andrew kayaks manufactures kayaks in its tampa plant each kayak passes through the assembly department and...

Andrew kayaks manufactures kayaks in its tampa plant each kayak passes through the assembly department and the testing department. This problem focuses on the assembly department. The process- costing system at Andrews Kayaks has a single direct cost category (direct materials) and a single indirect- cost category (conversion costs). Direct are added at the beginning of the process. Conversion costs are added evenly during the process. When the assembly department finishes work on each kayak, it is immediately transferred to...

A company tends to sell the rice for £1 a kilogram. The variable cost of production...

A company tends to sell the rice for £1 a kilogram. The variable cost of production per kilogram is 60 pence and the fixed costs associated with this product are estimated to be £50000 a year. The company’s maximum output of rice will be 250,000 kg per year. Present graphically by drawing break-even charts for the company. Also illustrate numerically.

Consider the following costs associated with pharmaceutical drug production. Which of the following are variable costs...

Consider the following costs associated with pharmaceutical drug production. Which of the following are variable costs and which are fixed costs? a) Research and development b) Manufacturing costs c) Market costs

company has variable costs of $34.50, total fixed costs of $21,700,000 and plans to sell its...

company has variable costs of $34.50, total fixed costs of $21,700,000 and plans to sell its product for $45.00. In 2018 it sold 2,400,000 units of product. Required: e) what is the operating leverage in 2018; f) the production manager wants to automate production and lower variable costs by $3 per unit and spend an additional $4,500,000 fixed costs per year- is this more profitable? g) The sales manager wants to drop prices by $2.50 per unit and spend an...

Question