Question
In: Accounting
Analyzing Income under Absorption and Variable Costing Variable manufacturing costs are $90 per unit, and fixed...
Analyzing Income under Absorption and Variable Costing
Variable manufacturing costs are $90 per unit, and fixed manufacturing costs are $95,400. Sales are estimated to be 8,200 units.
If an amount is zero, enter "0". Do not round interim calculations. Round final answer to nearest whole dollar.
a. How much would absorption costing income
from operations differ between a plan to produce 8,200 units and a
plan to produce 10,600 units?
$fill in the blank 1
b. How much would variable costing income from
operations differ between the two production plans?
$fill in the blank 2
Solutions
Expert Solution
|
a) $21,566 |
Working:-
|
Units Produced (A) |
Total fixed cost (B) |
Fixed cost per unit C = B / A |
Units Produced (D) |
Total fixed cost (E) |
Fixed cost per unit F = E / D |
Units Sold (G) |
Difference in Income G X ( C - F) |
||
|
8200 |
$95,400 |
$11.63 |
10,600 |
$95,400 |
$9 |
8200 |
$21,566 |
|
|
b) 0 |
Working:-
|
Units Produced (A) |
Variable cost per unit (B) |
Units Produced (C) |
Variable cost per unit (D) |
Units Sold (E) |
Difference in Income E X ( B - D) |
||
|
8200 |
$90 |
10,600 |
$90 |
8,200 |
0 |
|
ekkarill92 answered 1 year agoRelated Solutions
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.
$
Under absorption costing and variable costing, how are fixed manufacturing costs treated? a b c d
Under absorption costing and variable costing, how are fixed
manufacturing costs treated?
a
b
c
d
1. Variable Costing & Absorption Costing Selling price per unit is $50 Manufacturing costs include DM...
1. Variable Costing & Absorption Costing
Selling price per unit is $50
Manufacturing costs include DM $11 per
unit, DL $6 per unit, VMOH $3 per unit, Fixed MOH $120,000 per
year.
Selling and administrative costs
include $4 per unit and fixed costs of $70,000 per year.
Produced 10,000 units; sold 6,000
units.
Calculate unit product cost using
variable costing.
Calculate unit product cost using
absorption costing.
Which method will produce the highest
net income?
2. CVP Analysis
Backpacks...
Variable and Absorption Costing Chandler Company sells its product for $106 per unit. Variable manufacturing costs...
Variable and Absorption Costing
Chandler Company sells its product for $106 per unit. Variable
manufacturing costs per unit are $47, and fixed manufacturing costs
at the normal operating level of 12,000 units are $240,000.
Variable selling expenses are $18 per unit sold. Fixed
administrative expenses total $104,000. Chandler had no beginning
inventory in 2016. During 2016, the company produced 12,000 units
and sold 9,000. Would net income for Chandler Company in 2016 be
higher if calculated using variable costing or...
Variable and Absorption Costing Grant Company sells its product for $59 per unit. Variable manufacturing costs...
Variable and Absorption Costing
Grant Company sells its product for $59 per unit. Variable
manufacturing costs per unit are $36, and fixed manufacturing costs
at the normal operating level of 18,000 units are $90,000. Variable
selling expenses are $7 per unit sold. Fixed administrative
expenses total $155,000. Grant had 7,000 units at a per-unit cost
of $41 in beginning inventory in 2016. During 2016, the company
produced 18,000 units and sold 20,000. Would net income for Grant
Company in 2016...
Variable and Absorption Costing Chandler Company sells its product for $106 per unit. Variable manufacturing costs...
Variable and Absorption Costing
Chandler Company sells its product for $106 per unit. Variable
manufacturing costs per unit are $47, and fixed manufacturing costs
at the normal operating level of 12,000 units are $240,000.
Variable selling expenses are $18 per unit sold. Fixed
administrative expenses total $104,000. Chandler had no beginning
inventory in 2016. During 2016, the company produced 12,000 units
and sold 9,000. Would net income for Chandler Company in 2016 be
higher if calculated using variable costing or...
Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are...
Absorption Statement
Absorption costing does not distinguish between variable and
fixed costs. All manufacturing costs are included in the cost of
goods sold.
Saxon, Inc.
Absorption Costing Income Statement
For the Year Ended December 31
Sales
$1,200,000
Cost of goods sold:
Cost of goods manufactured
$800,000
Ending inventory
(200,000)
Total cost of goods sold
(600,000)
Gross profit
$600,000
Selling and administrative expenses
(290,000)
Operating income
$310,000
Variable Statement
Under variable costing, the cost of goods manufactured includes
only variable manufacturing...
Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are...
Absorption Statement
Absorption costing does not distinguish between variable and
fixed costs. All manufacturing costs are included in the cost of
goods sold.
Saxon, Inc.
Absorption Costing Income Statement
For the Year Ended December 31
Sales
$1,200,000
Cost of goods sold:
Cost of goods manufactured
$800,000
Ending inventory
(200,000)
Total cost of goods sold
(600,000)
Gross profit
$600,000
Selling and administrative expenses
(290,000)
Operating income
$310,000
Variable Statement
Under variable costing, the cost of goods manufactured includes
only variable manufacturing...
Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in...
Absorption costing does not distinguish between variable and
fixed costs. All manufacturing costs are included in the cost of
goods sold.
Saxon, Inc.
Absorption Costing Income Statement
For the Year Ended December 31
1
Sales
$1,200,000.00
2
Cost of goods sold:
3
Beginning inventory
$0.00
4
Cost of goods manufactured
800,000.00
5
Ending inventory
(160,000.00)
6
Total cost of goods sold
640,000.00
7
Gross profit
$560,000.00
8
Selling and administrative expenses
289,000.00
9
Income from operations
$271,000.00
Under variable costing,...
Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in...
Absorption costing does not distinguish between variable and
fixed costs. All manufacturing costs are included in the cost of
goods sold.
Saxon, Inc.
Absorption Costing Income Statement
For the Year Ended December 31
1
Sales
$1,125,000.00
2
Cost of goods sold:
3
Beginning inventory
$0.00
4
Cost of goods manufactured
840,000.00
5
Ending inventory
(210,000.00)
6
Total cost of goods sold
630,000.00
7
Gross profit
$495,000.00
8
Selling and administrative expenses
275,000.00
9
Income from operations
$220,000.00
Variable Statement
Under...
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