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Unformatted text preview: 9-20Variable versus absorption costing.1.Income Statement for the Zwatch Company, Variable Costingfor the Year Ended December 31, 2007Revenues: $22 × 345,400$7,598,800Variable costsVariable cost of goods sold: $5.10 × 345,4001,761,540Variable operating costs: $1.10 × 345,400379,940Total variable costs (at standard costs)2,141,480Adjustment for variancesTotal variable costs2,141,480Contribution margin5,457,320Fixed costsFixed manufacturing overhead costs1,440,000Fixed operating costs1,080,000Total fixed costs2,520,000Operating income$2,937,320Absorption Costing DataFixed manufacturing overhead allocation rate =Fixed manufacturing overhead/Denominator level machine-hours = $1,440,000.6,000 = $240 per machine-hourFixed manufacturing overhead allocation rate per unit = Fixed manufacturing overhead allocation rate/standard production rate = $240 .50 = $4.80 per unitIncome Statement for the Zwatch Company, Absorption Costingfor the Year Ended December 31, 2007Revenues: $22 × 345,400$7,598,800...
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This note was uploaded on 07/07/2009 for the course ACCT 2102 taught by Professor Unknown during the Three '08 term at Queensland.
- Three '08