Tarea 5 Cost Eng

Tarea 5 Cost Eng - 5-A1 Straightforward Income...

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Unformatted text preview: 5-A1 Straightforward Income StatementsThe independce Company had the followin manufacturing data for the year 2006 (in thousands of dollar)Beginning and ending inventoriesNoneDirect material used400Direct labor 330Supplies20Utilities- varible portion40Utilities-fixed portion12Indirect labor- varible portion90Indirect labor - fixed portion 40Depreciation200Property taxes20Supervisory Salaries 50Selling expenses were $300,000 (including that were varible)General administration expenses were $144,000 (including that were variable)Sales were $ 1.8 millionDirect labor and supplies are regarded as varible costs1. Prepare two income statemenys, one using the contribution approach and one using the absorption approachAbsorption approach-Income Statement (in thousand $) SalesLess manufacturingDirect material usedDirect LaborIndirect Mfct Gross Margin Selling expenses Adm. ExpensesOperating Income Contribution Approach-Income Statment (in thousand $)Sales Less: Variable ExpensesDirect materialDirect labor Variable Indirect MfctTotal variable MfctVarible selling exp. Varible admin. exp. Total Varible Ex. Contribution Margin Less: Fixed ExpensesMfct. ExpensesSelling Expenses Admin. Expenses Operating Income 2. Suppose that all variable costs fluctuate directly in proportion to sale and that fixed cost areunaffected over a very wide range of sales. What would operating income have been if salehad been $2.0 million insted of $1.8 million? Wich income statement did you use to help obtainyour ansawer? Why?1. preguntaAbsorption approach-Income Statement (in thousand $) SalesLess manufacturingDirect material usedDirect LaborIndirect Mfct Gross Margin Selling expenses Adm. ExpensesOperating Income Contribution Approach-Income Statment (in thousand $)Sales Less: Variable ExpensesDirect materialDirect labor Variable Indirect MfctTotal variable MfctVarible selling exp. Varible admin. exp. Total Varible Ex. Contribution Margin Less: Fixed ExpensesMfct. ExpensesSelling Expenses Admin. Expenses Operating Income 2. $2.0 million/ 1.8 millio = 10/9Now total variable = 963 x 10/9 = $1070 Oper. Income = sales- YE- FE=$1800-1070-683=47 Contribution approach inc. Statement is used because it register varible expenses 1,800400330472-1202598300144-44415418004003301508806023-963837332240121-683154the total 5-A4 Target Costing Lowest Cost CorporationMarket research has surveyed the potential market for this product and believes that itsunique features will generate a total demand over the products life of...
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This note was uploaded on 10/01/2011 for the course ITESM SEM2 taught by Professor Comptonw during the Spring '11 term at ITESM.

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Tarea 5 Cost Eng - 5-A1 Straightforward Income...

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