Far North Telecom

Far North Telecom - 470,000 830,000 Net Operating Loss...

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Far North Telecom Unit Product Cost a. Absorption Variable Direct materials  $48   $48  Fixed Manufacturing overhead 2 2 Unit product cost 30 0  $80   $50  b.  Absorption Costing Income Statem Sales  $1,500,000  Cost of goods sold  800,000  Gross margin  $700,000  Selling and Administrative expenses*  650,000  Net operating income  $50,000  *Variable  $180,000  Fixed  470,000  Total  $650,000  c. Variable Costing Income Statemen Sales  $1,500,000  Variable expenses: Variable cost of goods sold  500,000  Variable selling and administrative expense  180,000   680,000  Contribution Margin  $820,000  Fixed Expenses: Fixed manufacturing Overhead  360,000  Fixed Selling and administrative expenses
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Unformatted text preview: 470,000 830,000 Net Operating Loss $(10,000) d. For external reporting purposes such as obtaining additional financing, I would prefer to e. Reconciliation: Variable costing net income (loss) $(10,000) Add: Fixed overhead cost deferred in inventory under absorption costing 60,000 Absorption costing net operating income $50,000 ent nt to rely on the statement using the absorption method because the report shows a net profit versus a net loss with the variable method. However, for internal purposes I prefer to use the variable me ethod....
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This note was uploaded on 07/07/2011 for the course BUS 600 taught by Professor Lee during the Spring '11 term at Troy.

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Far North Telecom - 470,000 830,000 Net Operating Loss...

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