Question
In: Accounting
Manop, Inc. is facing a problem with their 4th quarter absorption costing net operating income on...
Manop, Inc. is facing a problem with their 4th quarter absorption costing net operating income on December 25. Their net operating income target is $250,000 and the data so far is as follows:
|
Sales Revenue |
$600,000 |
($200/unit) |
|
Variable COGS |
$240,000 |
($80/unit) |
|
Fixed manufacturing overhead |
$70,000 |
|
|
Fixed S&A |
$50,000 |
|
|
Variable S&A: Commission on Sales |
3% |
|
|
Finished Goods Inventory as of December 25 |
450 units |
Up until this quarter, Manop, Inc. has had a policy of having zero inventories at the end of each quarter. No further sales are possible during the year. Mr. D, the CEO, is planning to produce more units for inventory in the last week of December to meet the net operating income target.
Q) How many additional inventory units above the December 25 Finished Goods balance need to be produced in the fourth quarter to meet the net operating income target if the sales commission is left unchanged? (Express your answer to the nearest whole number.)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Calculation of absorption costing net operating income
Helmers Corporation manufactures a single product. Variable costing net operating income last year was $86,000 and this year was $103,000. Last year, $32,000 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $12,000 in fixed manufacturing overhead costs were deferred in inventory under absorption costing.
What was the absorption costing net operating income last year?
2.When does absorption costing net operating income and variable costing net operating income require reconciliation? Explain...
2.When does absorption costing net operating income and variable
costing net operating income require reconciliation? Explain
different situations with appropriate reasons behind such
changes.
Problem 5-41 (Algorithmic) Absorption Costing vs. Variable Costing: Benefits and Calculation of Net Operating Income Safety...
Problem 5-41 (Algorithmic)
Absorption Costing vs. Variable Costing: Benefits and Calculation
of Net Operating Income
Safety Shoes, Inc. produces a variety of products for the
manufacturing industry. Hiking-style steel toe boots are among its
most popular products. The company's controller spoke to the
company's president at a meeting last week and told her that the
company was doing well, but that the financial picture depended on
how product costs and net operating income were calculated. The
president did not realize...
A. The Contribution Margin Income Statement has a higher Net Operating Income than the Absorption Costing...
A. The Contribution Margin Income Statement has a higher
Net Operating Income than the Absorption Costing Income Statement:
true or false
B. The horizontal line on the CVP Graph represents what
one?
fixed costs
total revenue
total expenses
Variable Cost
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $63 per unit)
$
1,071,000
$
1,701,000
Cost of goods sold (@ $34 per unit)
578,000
918,000
Gross margin
493,000
783,000
Selling and administrative expenses*
300,000
330,000
Net operating income
$
193,000
$
453,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $34 unit product cost is computed as follows:
Direct materials
$
6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $61 per unit)
$
1,037,000
$
1,647,000
Cost of goods sold (@ $38 per
unit)
646,000
1,026,000
Gross margin
391,000
621,000
Selling and administrative
expenses*
300,000
330,000
Net operating income
$
\91,000\
$
291,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct
materials
$
7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $61 per
unit)
$
915,000
$
1,525,000
Cost of goods
sold (@ $41 per unit)
615,000
1,025,000
Gross
margin
300,000
500,000
Selling and
administrative expenses*
292,000
322,000
Net operating
income
$
8,000
$
178,000
* $3 per unit variable; $247,000 fixed each year.
The company’s $41 unit product cost is computed as follows:
Direct materials
$
10...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
992,000
$
1,612,000
Cost of goods sold (@ $38 per unit)
608,000
988,000
Gross margin
384,000
624,000
Selling and administrative expenses*
298,000
328,000
Net operating income
$
86,000
$
296,000
* $3 per unit variable; $250,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct materials
$
9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $62 per unit)
$
1,054,000
$
1,674,000
Cost of goods sold (@ $35 per
unit)
595,000
945,000
Gross margin
459,000
729,000
Selling and administrative
expenses*
300,000
330,000
Net operating income
$
\159,000\
$
399,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $35 unit product cost is computed as follows:
Direct
materials
$
6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it
reported absorption costing net operating income as follows:
Year 1
Year 2
Sales (@ $60 per unit)
$
900,000
$
1,500,000
Cost of goods sold (@ $38 per unit)
570,000
950,000
Gross margin
330,000
550,000
Selling and administrative expenses*
294,000
324,000
Net operating income
$
36,000
$
226,000
* $3 per unit variable; $249,000 fixed each year.
The company’s $38 unit product cost is computed as follows:
Direct materials
$
8...
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