Absorption Costing Income Statement

On March 31, the end of the first month of operations, Sullivan Equipment Company prepared the following income statement, based on the variable costing concept:

Prepare an income statement under absorption costing. Round all final answers to whole dollars.

Required: Treating each case independently, selected from the manufacturing data given below, find the missing amounts. You should do them in the order listed. (Hint: For the manufacturing costs in Case 3, first solve for conversion costs and then determine how much of that is direct labor and how much is manufacturing overhead.) (Do not round your intermediate calculations. Round your final answers to the nearest whole dollar. Enter all amounts as positive values.)

The following income statement was prepared for Frame Supplies for Year 1:

During the year-end audit, the following errors were discovered:

1. A $1,574 payment for repairs was erroneously charged to the Cost of Goods Sold account. (Assume that the perpetual inventory system is used.)
2. Sales to customers for $2,690 at December 31, Year 1, were not recorded in the books for Year 1. Also, the $1,146 cost of goods sold was not recorded.
3. A mathematical error was made in determining ending inventory. Ending inventory was understated by $1,247. (The Inventory account was mistakenly written down to the Cost of Goods Sold account.)

Required
Determine the effect, if any, of each of the errors on the following items. Give the dollar amount of the effect and whether it would overstate (O), understate (U), or not affect (NA) the account. The first item for each error is recorded as an example.
  

Summarized data for Walrus Co. for its first year of operations are:

A. Prepare an income statement under absorption costing.

B. Prepare an income statement under variable costing.

The question is:

Companies assign costs to products and services to: ( Select all that apply)

A. Determine the best supplier of raw materials.

B. Understand product profitability

C. Establish selling prices.

D. value ending inventory

I believe it is B, C & D. I am just not sure if it is A as well?? I will paste some explanation given.

Companies usually assign costs to their products and services for two main reasons. First, it helps them fulfill their planning, controlling, and decision-making responsibilities. For example, a company may use product cost information to better understand each product’s profitability or to establish each product’s selling price. Second, it helps them determine the value of ending inventories and cost of goods sold for external reporting purposes. The costs attached to products that have not been sold are included in ending inventories on the balance sheet, whereas the costs attached to units that have been sold are included in cost of goods sold on the income statement.

It is very common for external financial reporting requirements to heavily influence how companies assign costs to their products and services.Because most countries (including the United States) require some form of absorption costing for external financial reports, many companies use some form of absorption costing for product costing purposes. In absorption costing, all manufacturing costs, both fixed and variable, are assigned to units of product—units are said to fully absorb manufacturing costs. Conversely, all nonmanufacturing costs are treated as period costs and they are not assigned to units of product.

This chapter and the next explain a common type of absorption costing system known as job-order costing. In this chapter we’ll discuss the role of job-order costing systems in planning, control, and decision making. Our focus will be on assigning manufacturing costs to individual jobs. In the next chapter, we will explain how job-order costing systems can be used to determine the value of ending inventories and cost of goods sold for external reporting purposes.Thank you!

The next three questions are based on the following information: Strata Company is a retailer whose shares are publicly traded. During year X1, Strata reported the following quarterly financial information in its SEC filings: Quarter Q1 Q2 Q3 Q4 Pre-Tax Income 100,000 130,000 140,000 180,000 Taxes (20%) (20,000) (26,000) (28,000) (36,000) Net Income 80,000 104,000 112,000 144,000 As a retailer, Strata counts its inventory on 6/30 and 12/31 of each year. While observing Strata's inventory count on 12/31/X1 prior to closing, the auditor discovered that Strata's ending inventory count was overstated by $30,000 as it included goods received from Rapid Company that were being held on consignment. The auditor then went back to the inventory scan records that were made when Strata counted its inventory back on 6/30/X1 and discovered that the same $30,000 of goods being held on consignment had been counted when calculating Strata's ending inventory. As a corporation, Strata files quarterly tax returns with the IRS. In response to this information, what accounting entries if any should Strata make on 12/31/X1? Select one: a. Debit Cost of Sales for $30,000 and Credit Inventory for $30,000 b. Debit Cost of Sales for $24,000, Debit Tax Expense for $6,000 and Credit Inventory for $30,000 c. Debit Retained Earnings for $30,000 and Credit Inventory for $30,000 d. Debit Cost of Sales for $30,000, Debit Accounts Receivable $6,000, Credit Inventory for $30,000, and Credit Tax Expense for $6,000 e. None of the Above

Assume that P is a public Company that owns 90% of Strata and has previously filed consolidated financial statements for quarters Q1, Q2, and Q3 of year X1. Based on this information, what accounting entries should P make on 12/31/X1 when it is notified of the inventory counting problems? Select one: a. Debit Investment Income for $18,000 and Credit Investment in Strata for $18,000 b. Debit Investment Income for $21,600 and Credit Investment in Strata for $21,600 c. Debit Investment Income for $24,000 and Credit Investment in Strata for $24,000 d. Debit Retained Earnings for $24,000 and Credit Investment in Strata for $24,000 e. None of the Above Question 9

In addition to making correcting accounting entries, what additional responsibilities does P have under ASC 250 regarding its Investment in Strata? Select one: a. P is required to restate consolidated results for quarter Q2. b. P is required to restate consolidated results for quarter Q3. c. P is required to disclose the effects of the Strata error on previously reported results. d. All of the Above

PART C: PICKUP COIL
Step 1: Run the PhET sim, “Faraday’s Electromagnetic Lab.” Maximize the window. Click the Pickup Coil tab. You should see a bar magnet, a compass needle grid, and a coil attached to a light bulb.

Step 2: Describe the most effective way of using the magnet and the coil to light the bulb if

1. the coil cannot be moved.

2. the magnet cannot be move.

3. -------) Step 3:. Rank the arrangements and motions shown below from most effective to least effective in terms of lighting the bulb, allowing for ties. For example, if A were most effective, B were least effective, and C and D were equivalent to one another, the ranking would be A > C = D > B.(A=Transverse External) (B=Transverse Internal) (C=Longitudinal Internal) (D=Longitudinal External)   

4. Step 4: Move the bar magnet through the coil and observe the motion of the electrons in the forward arc of the coil loops. Report the correlations of magnet motion and electron motion.  a. Magnet approaches from the left, north pole first; electrons move downward. b. Magnet departs to the right, south end last; electrons move upward. c. Magnet approaches from the right, south pole first; electrons move _?_. d. Magnet departs to the left, north end last; electrons move _?_. e. Magnet approaches from the left, south pole first; electrons move _?_. f. Magnet departs to the right, north end last; electrons move _?_. g. Magnet approaches from the right, north pole first; electrons move _?_. h. Magnet departs to the left, south end last; electrons move _?_.

Consider the following pairs of goods. For which of the two goods would you expect the demand to be less price elastic? Why?              

a.         Covid-19 vaccine or Patchi Chocolate   

b.         Drink in general or Almarai Orange Juice         

c.         Demand for cigarettes over a three months or over the course of three years.       

d.         Petrol or the Graff Diamonds Hallucination watches.

1 The relative price of current consumer goods and future consumer goods is ()

A 1 + r

B 1 / (1 + r)

C r

D 1

2 In the intertemporal model, consumer diversity preferences are reflected in ()

A The more current consumption and the future consumption, the better

B. The more types of current and future consumer goods, the better

C The closer the current consumption and the future consumption are, the better

D Current consumption and future consumption increase with income

3 The conditions for consumer consumption-saving to achieve the optimal choice are ()

A MRSc, l = 1 + r

B MRSc, c '= 1 / (1 + r)

C MRTc, c '= 1 + r

D MRSc, c '= 1 + r

4 In the intertemporal model, the current income of consumers increases, the following statement is wrong ()

A Consumer's current consumption increases

B Consumer's current savings increase

C When the consumer is a borrower, the current consumption decreases

D Consumers' future consumption increases