HW4_5sol

HW4_5sol - $8,000 Cost of goods sold: Variable product...

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Problem 4 A. Tamper, Inc. Tamper, Inc. Varible Costing Income Statement Full Costing Income Stateme Year ending December 31, 2006 Year ending December 31, 20 Sales $8,000 Sales Variable costs: Cost of goods sold: Variable product costs $2,000 Variable product costs $2,000 Variable period costs 500 2,500 Fixed product costs 1,500 Contribution margin 5,500 Gross margin Fixed costs: Operating expenses: Fixed product costs 1,500 Variable period costs 500 Fixed period costs 2,500 4,000 Fixed period costs 2,500 Operating income $1,500 Operating income B Sales ($15*500) $8,000 Variable costs: Variable product costs $2,000 Variable period costs 500 Contribution margin $5,500 Reported on the variable costing income statement Tamper has $5,500 available to cover fixed costs and to contribute to profits. C Sales
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Unformatted text preview: $8,000 Cost of goods sold: Variable product costs 2,000 Fixed product costs 1,500 Gross margin $4,500 Reported on the GAAP (full costing) income statement Tamper has $4,500 available to cover operating costs and to contribute to profits. D. Income is the same on both. The expenses are just rearranged within the statements nt 006 $8,000 3,500 $4,500 3,000 $1,500 ts. Problem 5 A. Unit selling price = $81,000/600 = $135.00 Unit variable cost = [$13,200 + $6,000] / 600 = $32.00 Unit contribution margin = $135.00 - $32.00 = $103.00 CM ratio = $103 / $135 = 76.30% (2 decimals on percentages always) B. Increase in profit = $103*1 = $103 increase C. GP ratio tells how much our of every sales dollar is available to cover operating expenses and to contribute to profit. $49,800 / $81,000 = 61.48%...
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HW4_5sol - $8,000 Cost of goods sold: Variable product...

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