2.67 - 2.67 (40 min) Absorption versus variable costing a....

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2.67 (40 min) Absorption versus variable costing a. Absorption-costing operating profit: Year 1 Year 2 Two- year Total Sales revenue (10,000 x $51). ................ $510,0 00 $510,0 00 $1,020,0 00 Less: Cost of goods sold: Beginning inventory. ........................... –0– $100,0 00 –0– Current manufacturing costs:. ............. Variable costs: Year 1, (15,000 x $5)……………. . 75,000 Year 2, (5,000 x $5)……………… 25,000 100,000 Fixed costs 225,00 0 225,00 0 450,000 Less: Ending inventory. ...................... (100,0 00 )* –0– –0– Cost of goods sold. .............................. $200,0 00 $350,0 00 $550,00 0 Gross margin. ........................................ $310,0 00 $160,0 00 $470,00 0 Less: Marketing and admin. costs. ......... 140,00 0 140,00 0 280,000 Operating profit. .................................... $170,0 00 $ 20,000 $190,00 0 *(Total manufacturing costs/units produced) x units sold = [ ($75,000 + $225,000) / 15,000] x 5,000 = $100,000 b. Variable-costing operating profit:
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This note was uploaded on 11/25/2010 for the course ACCT 33010 taught by Professor Staff during the Spring '08 term at Kent State.

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2.67 - 2.67 (40 min) Absorption versus variable costing a....

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