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Lesson #4, Assignment #4

# Lesson #4, Assignment #4 - Student Name Class Problem 07-17...

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Student Name: Class: Problem 07-17 MEMOTEC, INC. Income Statement Year 1 Year 2 Year 3 Sales \$1,000,000 \$800,000 \$1,000,000 Variable expenses: Variable cost of goods sold at \$4 per unit 200,000 160,000 200,000 Variable selling and administrative at \$2 per unit 100,000 80,000 100,000 Total variable expenses 300,000 240,000 300,000 Contribution margin 700,000 560,000 700,000 Fixed expenses: Fixed manufacturing overhead 600,000 600,000 600,000 Fixed selling and administrative 70,000 70,000 70,000 Total fixed expenses 670,000 670,000 670,000 Net operating income (loss) \$30,000 (\$110,000) \$30,000 Correct! Correct! Correct! MEMOTEC, INC. Computations 2a. Unit product cost: Year 1 Year 2 Year 3 Variable manufacturing cost \$4.00 \$4.00 \$4.00 Fixed manufacturing cost 12.00 10.00 15.00 Unit product cost \$16.00 \$14.00 \$19.00 Correct! Correct! Correct! 2b. Reconciliations: Variable costing net operating income (loss) \$30,000 (\$110,000) \$30,000 Add (Deduct): Fixed manufacturing overhead cost deferred in inventory from Year 2 and Year 3 under absorption costing 200,000 (200,000) Add: Fixed manufacturing overhead cost deferred in inventory from Year 3 to the future under absorption costing 150,000 Absorption costing net operating income

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Lesson #4, Assignment #4 - Student Name Class Problem 07-17...

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