43865963-ACC-331-Ch-9-Solutions

43865963-ACC-331-Ch-9-Solutions - 9-16 (30 min.) Variable...

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Unformatted text preview: 9-16 (30 min.) Variable and absorption costing, explaining operating income differences.1.Key inputs for income statement computations are:AprilMayBeginning inventoryProductionGoods available for saleUnits soldEnding inventory50050035015015040055052030The unit fixed and total manufacturing costs per unit under absorption costing are:AprilMay(a)Fixed manufacturing costs(b)Units produced(c)=(a)(b)Unit fixed manufacturing costs(d)Unit variable manufacturing costs(e)=(c)+(d)Unit total manufacturing costs$2,000,000500$4,000$10,000$14,000$2,000,000400$5,000$10,000$15,0009-19-16(Cont'd.)(a)Variable costingApril 19_7May 19_7Revenuesa$8,400,000$12,480,000Variable costsBeginning inventoryVariable cost of goods manufacturedbCost of goods available for saleEnding inventorycVariable manufacturing cost of goods soldVariable marketing costsTotal variable costsContribution marginFixed costsFixed manufacturing costsFixed marketing costsTotal fixed costsOperating income$ 5,000,0005,000,0001,500,0003,500,0001,050,0002,000,000600,0004,550,0003,850,0002,600,000$1,250,000$1,500,0004,000,0005,500,000300,0005,200,0001,560,0002,000,000600,0006,760,0005,720,0002,600,000$3,120,000a $24,000 350; 520b$10,000 500; 400c$10,000 150; 309-29-16(Cont'd.)(b)Absorption costingApril 19_7May 19_7Revenuesa$8,400,000$12,480,000Cost of goods soldBeginning inventoryVariable manufacturing costsb$5,000,000$2,100,0004,000,000Fixed manufacturing costsc2,000,0002,000,000Cost of goods available for saleEnding inventoryd7,000,0002,100,0008,100,000450,000Cost of goods soldGross marginMarketing costs4,900,0003,500,0007,650,0004,830,000Variable marketing costse1,050,0001,560,000Fixed marketing costsTotal marketing costsOperating income600,0001,650,000$1,850,000600,0002,160,000$ 2,670,000a$24,000 350; 520b$10,000 500; 400c($4,000 500); ($5,000 400)d($14,000 150; $15,000 30)e($3,000 350; $3,000 520)9-39-16(Contd.)2. = inventorybeginningincostsingmanufacturFixedApril:$1,850,000 $1,250,000=($4,000 150) ($0)$600,000=$600,000May:$2,670,000 $3,120,000=($5,000 30) ($4,000 150) $450,000=$150,000 $600,000 $450,000= $450,000The difference between absorption and variable costing is due solely to moving fixed manufacturing costs into inventories as inventories increase (as in April) and out of inventories as they decrease (as in May).9-49-17 (20 min.) Throughput costing (continuation of Exercise 9-16).1.April 19_7May 19_7Revenuesa$8,400,000$12,480,000Variable direct materials costsBeginning inventoryDirect materials in goods manufacturedb$ 3,350,000$1,005,0002,680,000Cost of goods available for saleEnding inventoryc3,350,0001,005,0003,685,000201,000Total variable direct materials costsThroughput contributionOther costs2,345,0006,055,0003,484,0008,996,000Manufacturing3,650,000d3,320,000eMarketing1,650,000f2,160,000gTotal other costsOperating income5,300,000$ 755,0005,480,000$3,516,000a$24,000 350; 520e($3,300 400) + $2,000,000 = $3,320,000...
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43865963-ACC-331-Ch-9-Solutions - 9-16 (30 min.) Variable...

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