Copy of 320C09

# Copy of 320C09 - Problem 9-18 1. Present income statements...

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Problem 9-18 1. Present income statements (January, February, March) under (a) variable costing and (b) absorptio (a) Variable costing using a Standard Cost System P>S January Beginning Inventory 0 Units Produced 1,000 Goods Available for Sale 1,000 Units Sold 700 Ending Inventory 300 Per Unit Revenue \$2,500 \$1,750,000 Variable Costs Manufacturing Direct Materials From 9-19 \$500 \$350,000 Direct Labor From 9-19 100 70,000 MOH From 9-19 300 210,000 Total Variable Manufacturing Costs \$900 \$630,000 Mfg. Contribution Margin \$1,600 \$1,120,000 Operating Costs 600 420,000 Total Contribution Margin \$1,000 \$700,000 Fixed Costs Manufacturing Costs \$400,000 Operating Costs 140,000 Total Fixed Costs \$540,000 Net Income (Variable Costing) \$160,000 (b) Absorption Costing using a Standard Cost System January Beginning Inventory 0 Units Produced 1,000 Goods Available for Sale 1,000 Units Sold 700 Ending Inventory 300 Per Unit Revenue \$2,500 \$1,750,000 Cost of Goods Sold Manufacturing Direct Materials From 9-19 \$500 \$350,000 Direct Labor From 9-19 \$100 70,000 VMOH From 9-19 \$300 210,000 1,000 \$400 280,000 0 Total Cost of Goods Sold \$910,000 Gross Profit \$840,000 Operating Costs Variable \$600 \$420,000 Fixed 140,000 Total Operating Costs \$560,000 Net Income (Absorption) \$280,000 FMOH (using a denominator level of 1,000) Production-Volume Variance (All closed to COGS)

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2. Explain the differences between (a) and (b) for January, February, and March. P>S January Net Income using Absorption Costing \$280,000 Net Income using Variable Costing 160,000 Difference in Income Reported \$120,000 Fixed Costs Reported on I/S using Variable Costing Manufacturing \$400,000 Operating 140,000 Total FC using Variable Costing \$540,000 Fixed Costs Reported on I/S using Absorbtion Costing Manufacturing (Includes PVV) \$280,000 Operating 140,000 Total FC using Absorption Costing \$420,000 Difference Accounted for \$120,000 Physical Units in Ending Inventory 300 Fixed Costs in Ending Inventory -- Absorption Costing \$120,000 Fixed Costs in Beginning Inventory -- Absorption Costing 0 Change in Fixed MOH Assigned to Inventory \$120,000 Relationship: Absorption Costing Income - Variable Costing Income = FMOH in EI - The difference between Absorption Costing Income and Variable Costing Income is d FMOH costs into inventories as inventories increase (as in January) and out of invent decrease (as in March).
Problem 9-19 n costing. 1. Present income statements (January, February, March) P=S P<S February March 300 300 Beginning Inventory 800 1,250 Units Produced 1,100 1,550 Goods Available for Sale 800 1,500 Units Sold 300 50 Ending Inventory Per Unit \$2,000,000 \$3,750,000 Revenue \$2,500 DM Costs Associated with Units Sold 500 Throughput Contribution \$2,000 \$400,000 \$750,000 Other Costs 80,000 150,000 Variable With Production 240,000 450,000 Direct Labor \$100 \$720,000 \$1,350,000 Mfg. Overhead 300 \$1,280,000 \$2,400,000 Variable With Sales 480,000 900,000 Operating Costs 600 \$800,000 \$1,500,000 Fixed Costs Manufacturing Costs

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## This note was uploaded on 05/19/2010 for the course ACCT 320 taught by Professor Leese,w during the Spring '08 term at CSU Chico.

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Copy of 320C09 - Problem 9-18 1. Present income statements...

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