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HW4_5sol

# HW4_5sol - \$8,000 Cost of goods sold Variable product costs...

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Problem 4 A. Tamper, Inc. Tamper, Inc. Varible Costing Income Statement Full Costing Income Statemen 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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