Question

In: Accounting

*please type out the answer. The Hampton Company produces and sells a single product. The following...

*please type out the answer.

The Hampton Company produces and sells a single product. The following data refer to the year just completed.

Selling price

$450

Units in beginning inventory

0

Units produced

25,000

Units sold

22,000

Variable costs per unit:

Direct materials

$150

Direct labor

$75

Variable manufacturing overhead

$25

Variable selling and admin

$15

Fixed costs:

Fixed manufacturing overhead

$275,000

Fixed selling and admin

$200,000



Required:
Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.
Prepare an income statement for the year using absorption costing.
Prepare an income statement for the year using variable costing.

Solutions

Expert Solution

1
Absorption costing:
Direct materials 150
Direct labor 75
Variable manufacturing overhead 25
Fixed manufacturing overhead 11 =275000/25000
Unit product cost 261
Variable costing:
Direct materials 150
Direct labor 75
Variable manufacturing overhead 25
Unit product cost 250
2
Income statement absorption costing:
Sales 9900000 =22000*450
Cost of goods sold 5742000 =22000*261
Gross margin 4158000
Selling and administrative expenses 530000 =200000+(22000*15)
Net operating income 3628000
Income statement variable costing:
Sales 9900000
Variable expenses:
Variable cost of goods sold 5500000
Variable selling and administrative expenses 330000
Total Variable expenses 5830000
Contribution margin 4070000
Fixed expenses:
Fixed manufacturing overhead 275000
Fixed selling and administrative expenses 200000
Total Fixed expenses 475000
Net operatimg income(loss) 3595000

Related Solutions

The Timbrick Company produces and sells a single product. The production of this product requires 15...
The Timbrick Company produces and sells a single product. The production of this product requires 15 liters of direct material for each unit produced. Timbrick has an inventory policy which sets a target ending inventory of finished goods equal to 15% of next months expected unit sales. The target ending inventory for direct materials is 30% of the materials needed for production for next month. The budgeted cost of direct materials is $0.40 per liter. Normally, Timbrick pays the suppliers...
The Central Valley Company is a manufacturing firm that produces and sells a single product. The...
The Central Valley Company is a manufacturing firm that produces and sells a single product. The company’s revenues and expenses for the last four months are given below. Central Valley Company Comparative Monthly Income Statements March April May June Sales in units 6,800 6,300 7,050 7,300 Sales revenue $ 829,600 $ 768,600 $ 860,100 $ 890,600 Less: Cost of goods sold 418,500 393,000 426,250 444,000 Gross margin 411,100 375,600 433,850 446,600 Less: Operating expenses Shipping expense 76,000 71,000 79,250 80,000...
The Central Valley Company is a manufacturing firm that produces and sells a single product. The...
The Central Valley Company is a manufacturing firm that produces and sells a single product. The company’s revenues and expenses for the last four months are given below. Central Valley Company Comparative Income Statement March April May June   Sales in units 5,800 5,300 6,450 7,600   Sales revenue $ 742,400 $ 678,400 $ 825,600 $ 972,800 Less: Cost of goods sold 392,200 366,336 429,312 496,128 Gross margin $ 350,200 $ 312,064 $ 396,288 $ 476,672 Less: Operating Expenses            Shipping expense...
The Central Valley Company is a manufacturing firm that produces and sells a single product. The...
The Central Valley Company is a manufacturing firm that produces and sells a single product. The company’s revenues and expenses for the last four months are given below. Central Valley Company Comparative Income Statement March April May June Sales in units 6,900 6,400 8,100 9,800 Sales revenue $ 793,500 $ 736,000 $ 931,500 $ 1,127,000 Less: Cost of goods sold 421,350 397,440 484,380 574,770 Gross margin $ 372,150 $ 338,560 $ 447,120 $ 552,230 Less: Operating Expenses Shipping expense $...
A company that produces and sells a single product for $22 per unit has provided the...
A company that produces and sells a single product for $22 per unit has provided the following volume and average cost data for two accounting period: Level of activity (unit) ---------------------------- ---------------- 1,000 2,000 Direct materials ------------------------- ------------------------ $4.00 $4.00 Direct Labor----------------------------------------------------- $3.00 $3.00 Manufacturing overhead-------------------------------------------- $3.50 $2.50 General, selling, and administrative expenses-------------- $1.00 $0.50 1. The best estimate of the total contribution margin when 4,300 units are sold is: $64,500 $45,150 $58,050 $51,600 2. The best estimate of the...
The Cornerstone Corporation produces and sells a single product. The following data refers to the year...
The Cornerstone Corporation produces and sells a single product. The following data refers to the year just completed: List of Account Titles Beginning inventory 0 Units produced 9,000 Units sold 7,000 Selling price per unit $ 47 Selling and administrative expenses: Variable Cost per unit $ 4 Fixed Cost per year $ 58,000 Manufacturing costs: Direct materials cost per unit $ 10 Direct labor cost per unit $ 6 Variable manufacturing overhead cost per unit $ 5 Fixed manufacturing overhead...
The Dorset Corporation produces and sells a single product. The following data refer to the year...
The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Beginning inventory 0 Units produced 30,300 Units sold 24,700 Selling price per unit $ 465 Selling and administrative expenses: Variable per unit $ 25 Fixed per year $ 469,300 Manufacturing costs: Direct materials cost per unit $ 211 Direct labor cost per unit $ 53 Variable manufacturing overhead cost per unit $ 36 Fixed manufacturing overhead per year $ 454,500 Assume that...
The Dorset Corporation produces and sells a single product. The following data refer to the year...
The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Beginning inventory 0 Units produced 32,700 Units sold 27,100 Selling price per unit $ 459 Selling and administrative expenses: Variable per unit $ 20 Fixed per year $ 406,500 Manufacturing costs: Direct materials cost per unit $ 298 Direct labor cost per unit $ 52 Variable manufacturing overhead cost per unit $ 30 Fixed manufacturing overhead per year $ 425,100 Assume that...
The Dorset Corporation produces and sells a single product. The following data refer to the year...
The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Beginning inventory 0 Units produced 34,000 Units sold 28,700 Selling price per unit $ 409 Selling and administrative expenses: Variable per unit $ 18 Fixed per year $ 602,700 Manufacturing costs: Direct materials cost per unit $ 252 Direct labor cost per unit $ 55 Variable manufacturing overhead cost per unit $ 32 Fixed manufacturing overhead per year $ 646,000 Assume that...
The Dorset Corporation produces and sells a single product. The following data refer to the year...
The Dorset Corporation produces and sells a single product. The following data refer to the year just completed: Beginning inventory 0 Units produced 31,700 Units sold 28,600 Selling price per unit $ 416 Selling and administrative expenses: Variable per unit $ 22 Fixed per year $ 457,600 Manufacturing costs: Direct materials cost per unit $ 240 Direct labor cost per unit $ 54 Variable manufacturing overhead cost per unit $ 37 Fixed manufacturing overhead per year $ 380,400 Assume that...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT