Question
In: Accounting
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced 25,000
units and sold 19,000 units. During 2022, XYZ Company produced 30,000
units and sold 32,000 units. The following information was taken from
XYZ's accounting records for 2021 and 2022:
2021 2022
Direct materials cost per unit ............ $18 $17
Direct labor cost per unit ................ $16 $21
Variable overhead cost per unit ........... $7 $9
Variable selling & admin cost per unit .... $4 $6
Fixed overhead (total cost) ............... $105,000 $144,000
Fixed selling & admin (total cost) ........ $88,000 $96,000
Assume the selling price of XYZ Company's product was $64 per unit for
both years.
Calculate XYZ Company's 2022 net income using variable costing.
Assume XYZ Company employs a FIFO inventory cost flow assumption.Solutions
Expert Solution
Ending Inventory for 2021 = Units produced - Units sold
= 25,000 units - 19,000 units = 6,000 units
Ending Inventory for 2022 = Beginning Inventory+Units produced-Units sold
= 6,000 units+30,000 units-32,000 units = 4,000 units
Under FIFO method, the goods purchased first are sold first. In the given case 32,000 units sold include 6,000 units from beginning inventory (at the prices of 2021) and remaining 26,000 units from goods produced in 2022 (at price of 2022).
Under variable costing, only variable manufacturing costs are included in product cost and all the fixed costs are considered as period costs.
Variable manufacturing cost for 2021 = Direct materials+Direct labor+Variable overhead
= $18+$16+$7 = $41 per unit
Variable manufacturing cost for 2022 = Direct materials+Direct labor+Variable overhead
= $17+$21+$9 = $47 per unit
Variable cost of goods sold = (6,000 units*$41)+(26,000 units*$47)
= $246,000+$1,222,000 = $1,468,000
Income statement for the year 2022 is shown as follows:- (Amounts in $)
| Sales (32,000 units*$64) | 2,048,000 |
| Less: Variable Cost of goods sold | (1,468,000) |
| Less: Variable Selling and administration cost (32,000 units*$6) | (192,000) |
| Contribution Margin | 388,000 |
| Less: Fixed Overhead | (144,000) |
| Less: Fixed Selling and Administrative cost | (96,000) |
| Net Income | 148,000 |
ekkarill92 answered 1 year agoRelated Solutions
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced
25,000 units and sold 19,000 units. During 2022, XYZ Company
produced 30,000 units and sold 32,000 units. The following
information was taken from XYZ's accounting records for 2021 and
2022: 2021 2022 Direct materials cost per unit ............ $18 $17
Direct labor cost per unit ................ $16 $21 Variable
overhead cost per unit ........... $7 $9 Variable selling &
admin cost per unit .... $4 $6 Fixed overhead (total cost)...
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced
25,000 units and sold 19,000 units. During 2022, XYZ Company
produced 30,000 units and sold 32,000 units. The following
information was taken from XYZ's accounting records for 2021 and
2022: 2021 2022 Direct materials cost per unit ............ $18 $17
Direct labor cost per unit ................ $16 $21 Variable
overhead cost per unit ........... $7 $9 Variable selling &
admin cost per unit .... $4 $6 Fixed overhead (total cost)...
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced 25,000
units and sold 19,000 units. During 2022, XYZ Company produced 30,000
units and sold 32,000 units. The following information was taken from
XYZ's accounting records for 2021 and 2022:
2021 2022
Direct materials cost per unit ............ $18 $17
Direct labor cost per unit ................ $16 $21
Variable overhead cost per unit ........... $7 $9
Variable selling & admin cost per unit .... $4 $6
Fixed overhead (total cost)...
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the...
Dozier Company produced and sold 1,000 units during its first
month of operations. It reported the following costs and expenses
for the month:
Direct materials
$
73,000
Direct labor
$
37,000
Variable manufacturing overhead
$
16,600
Fixed manufacturing overhead
29,200
Total manufacturing overhead
$
45,800
Variable selling expense
$
12,800
Fixed selling expense
19,600
Total selling expense
$
32,400
Variable administrative expense
$
4,400
Fixed administrative expense
25,800
Total administrative expense
$
30,200
Required:
1. With respect to cost classifications...
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the...
Dozier Company produced and sold 1,000 units during its first
month of operations. It reported the following costs and expenses
for the month:Dozier Company produced and sold 1,000 units during
its first month of operations. It reported the following costs and
expenses for the month:
Direct Material
$77,000
Direct Labor
$39,000
Variable Manufacturing Overhead
$18,200
Fixed Manufacturing Overhead
$30,400
Total Manufacturing Overhead
$48,600
Variable Selling expense
$13,600
Fixed Selling expense
$21,200
Total Selling expense
$34,800
Variable Administrative expense
$4,800
Fixed...
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the...
Dozier Company produced and sold 1,000 units during its first
month of operations. It reported the following costs and expenses
for the month:
Direct materials
$
84,000
Direct labor
$
42,500
Variable manufacturing overhead
$
21,000
Fixed manufacturing overhead
32,500
Total manufacturing overhead
$
53,500
Variable selling expense
$
15,000
Fixed selling expense
24,000
Total selling expense
$
39,000
Variable administrative expense
$
5,500
Fixed administrative expense
28,000
Total administrative expense
$
33,500
Required:
1. With respect to cost classifications...
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the...
Dozier Company produced and sold 1,000 units during its first
month of operations. It reported the following costs and expenses
for the month:
Direct materials
$
82,000
Direct labor
$
41,500
Variable manufacturing overhead
$
20,200
Fixed manufacturing overhead
31,900
Total manufacturing overhead
$
52,100
Variable selling expense
$
14,600
Fixed selling expense
23,200
Total selling expense
$
37,800
Variable administrative expense
$
5,300
Fixed administrative expense
27,600
Total administrative expense
$
32,900
Required:
1. With respect to cost classifications...
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the...
Dozier Company produced and sold 1,000 units during its first
month of operations. It reported the following costs and expenses
for the month:
Direct materials $ 85,000
Direct labor $ 43,000
Variable manufacturing overhead $ 21,400
Fixed manufacturing overhead 32,800
Total manufacturing overhead $ 54,200
Variable selling expense $ 15,200
Fixed selling expense 24,400
Total selling expense $ 39,600
Variable administrative expense $ 5,600
Fixed administrative expense 28,200
Total administrative expense $ 33,800
Required:
1. With respect to cost classifications...
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the...
Dozier Company produced and sold 1,000 units during its first
month of operations. It reported the following costs and expenses
for the month:
Direct materials
$
77,000
Direct labor
$
39,000
Variable manufacturing overhead
$
18,200
Fixed manufacturing overhead
30,400
Total manufacturing overhead
$
48,600
Variable selling expense
$
13,600
Fixed selling expense
21,200
Total selling expense
$
34,800
Variable administrative expense
$
4,800
Fixed administrative expense
26,600
Total administrative expense
$
31,400
Required:
1. With respect to cost classifications...
Dozier Company produced and sold 1,000 units during its first month of operations. It reported the...
Dozier Company produced and sold 1,000 units during its first
month of operations. It reported the following costs and expenses
for the month:
Direct materials
$
80,000
Direct labor
$
40,500
Variable manufacturing overhead
$
19,400
Fixed manufacturing overhead
31,300
Total manufacturing overhead
$
50,700
Variable selling expense
$
14,200
Fixed selling expense
22,400
Total selling expense
$
36,600
Variable administrative expense
$
5,100
Fixed administrative expense
27,200
Total administrative expense
$
32,300
Required:
1. With respect to cost classifications...
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