Question

In: Accounting

Franz began business at the start of this year and had the following costs: variable manufacturing...

Franz began business at the start of this year and had the following costs: variable manufacturing cost per unit, $9; fixed manufacturing costs, $60,000; variable selling and administrative costs per unit, $2; and fixed selling and administrative costs, $266,000. The company sells its units for $49 each. Additional data follow.

Planned production in units	10,000
Actual production in units	10,000
Number of units sold	9,500

There were no variances.

The income (loss) under absorption costing is:

None of these.

$38,000.

$36,000.

$35,000.

$(8,500).

The income (loss) under variable costing is:

$35,000.

some other amount.

$(8,500).

$38,000.

$36,000.

Expert Solution

All working forms parts of the answer
Absorption Costing

Fixed manufacturing cost	$60000
Actual Production	10000
Fixed cost per unit	$6
Add: variable manufacturing cost	$9
Total manufacturing cost per unit	$15

Income Statement

Sales	9500 x $49	$465,500
(-) Cost of Goods Sold	9500 units x $15	$142,500
Gross Margin		$323,000
(-) variable selling expense	9500 units x $2	$19,000
(-) Fixed selling cost		$266,000
Income (loss) under absorption costing		$38,000

Hence, the correct answer is Option – 2: $38,000

Variable Costing

Income Statement

Sales	9500 x $49	$465,500
(-) variable costs	9500 units x $(9 + 2)	$104,500
Contribution margin		$361,000
(-) total fixed costs	[$60000+$266000]	$326,000
Income (Loss) under variable Costing		$35,000

Hence, the correct answer is OPTION 1: $35,000

ekkarill92 answered 1 year ago

Patin Corporation began business on September 23rd of the current year. It incurred the following costs...

Patin Corporation began business on September 23rd of the current year. It incurred the following costs prior to opening to customers: $26,560 employee training, $5,000 supplies, $41,457 legal, and $10,000 accounting. How much may be deducted in the first year (the current year)? (Round final answer to the nearest whole dollar.)

Springstein began business at the start of the current year. The company planned to produce 40,000...

Springstein began business at the start of the current year. The company planned to produce 40,000 units, and actual production conformed to expectations. Sales totaled 34,000 units at $39 each. Costs incurred were: Fixed manufacturing overhead $255,000 Fixed selling and administrative cost 203,000 Variable manufacturing cost per unit 18 Variable selling and administrative cost per unit 5 If there were no variances, the company's variable-costing income would be: $114,500. $544,000. $29,000. None of these. $86,000 Springer...

Carrington, Inc. began business at the start of the current year and maintains its accounting records...

Carrington, Inc. began business at the start of the current year and maintains its accounting records on an absorption-cost basis. The following selected information appeared on the company's income statement and end-of-year balance sheet: Income Statement data: Sales revenues (45,000 units × $19) $ 855,000 Gross margin 315,000 Total sales and administrative expenses 171,000 Balance sheet data: Ending finished goods inventory (20,000 units) 240,000 Carrington achieved its planned production level for the year. The company's fixed manufacturing overhead totaled $130,000,...

ABC, Inc. is a newly organized manufacturing business this year. The following company's costs and expenses...

ABC, Inc. is a newly organized manufacturing business this year. The following company's costs and expenses are: Sales price per unit $41 Manufacturing costs: Fixed Costs Variable Costs Direct materials $8 Direct labor 6 Variable Manufacturing overhead 3 Fixed Manufacturing overhead $80,000 Period expenses: Variable Selling and administrative expenses 4 Fixed Selling and Administrative expenses 20,000 Totals $100,000 $21 Units sold 6,000 units Required: Use the information in the DATA field above using cell referencing to answer the following requirements. ...

Variable Costing—Production Exceeds Sales Fixed manufacturing costs are $37 per unit, and variable manufacturing costs are...

Variable Costing—Production Exceeds Sales Fixed manufacturing costs are $37 per unit, and variable manufacturing costs are $111 per unit. Production was 91,000 units, while sales were 86,450 units. a. Determine whether variable costing income from operations is less than or greater than absorption costing income from operations. b. Determine the difference in variable costing and absorption costing income from operations. $

Tech Com's. predicted 2017 variable and fixed costs are as follows: Variable costs Fixed costs Manufacturing...

Tech Com's. predicted 2017 variable and fixed costs are as follows: Variable costs Fixed costs Manufacturing 480,000 315900 Selling and Administrative 216,000 60500 Total 696,000 376,400 Tech com. produces a wide variety of computer interface devices. Per unit manufacturing cost information about one of these products, a high-capacity flash drive is as follows: Direct material $10 Direct labor 9 Variable Manufacturing Overhead 7 Fixed Manufacturing Overhead 9 Total manufacturing costs $35 The following is the variable selling and administrative costs...

Kohlman Company began its operations on March 31 of the current year. Projected manufacturing costs for...

Kohlman Company began its operations on March 31 of the current year. Projected manufacturing costs for the first three months of business are $156,800, $195,200, and $217,600, respectively, for April, May, and June. Depreciation, insurance, and property taxes represent $28,800 of the estimated monthly manufacturing costs. Insurance was paid on March 31, and property taxes will be paid in November. Three-fourths of the remainder of the manufacturing costs are expected to be paid in the month in which they are...

Webster Manufacturing uses a flexible budget for manufacturing costs based on machine hours. Variable manufacturing costs...

Webster Manufacturing uses a flexible budget for manufacturing costs based on machine hours. Variable manufacturing costs per machine hour are as follows: Indirect labor $5.00 Indirect materials 2.50 Maintenance .50 Utilities .30 Fixed costs per month are: Supervision $1,200 Insurance 400 Property taxes 600 Depreciation 1,800 Part A: The Company believes it will normally operate in a range of 4,000 to 8,000 machine hours per month, selling at a price of $10 per machine hour. Instructions Prepare a flexible budget using increments of 2,000 machine hours within the activity...

For the past year, Iris Company had fixed costs of $6,708,000, a unit variable cost of...

For the past year, Iris Company had fixed costs of $6,708,000, a unit variable cost of $444, and a unit selling price of $600. For the coming year, no changes are expected in revenues and costs, except that a new wage contract will increase variable costs by $6 per unit. Determine the break-even sales (units) for (a) the past year and (b) the coming year.

A company’s budgeted costs for 60,000 units are as follows: Fixed manufacturing costs $30,000 Variable manufacturing...

A company’s budgeted costs for 60,000 units are as follows: Fixed manufacturing costs $30,000 Variable manufacturing costs $15.00 per unit The company produced 50,000 units. How much is the flexible budget total manufacturing cost?