# S11 - 9-16(30 min Variable and absorption costing...

This preview shows pages 1–4. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 9-16 (30 min.) Variable and absorption costing, explaining operating-income differences.1.Key inputs for income statement computations areAprilMayBeginning inventoryProductionGoods available for saleUnits soldEnding inventory50050035015015040055052030The budgeted fixed cost per unit and budgeted total manufacturing cost per unit under absorption costing areAprilMay(a)Budgeted fixed manufacturing costs(b)Budgeted production(c)=(a)÷(b)Budgeted fixed manufacturing cost per unit(d)Budgeted variable manufacturing cost per unit(e)=(c)+(d)Budgeted total manufacturing cost per unit\$2,000,000500\$4,000\$10,000\$14,000\$2,000,000500\$4,000\$10,000\$14,000(a)Variable costingApril 2011May 2011Revenuesa\$8,400,000\$12,480,000Variable costsBeginning inventory\$ \$1,500,000Variable manufacturing costsb5,000,0004,000,000Cost of goods available for sale5,000,0005,500,000Deduct ending inventoryc(1,500,000)(300,000)Variable cost of goods sold3,500,0005,200,000Variable operating costsd1,050,0001,560,000Total variable costs4,550,0006,760,000Contribution margin3,850,0005,720,000Fixed costsFixed manufacturing costs2,000,0002,000,000Fixed operating costs600,000600,000Total fixed costs2,600,0002,600,000Operating income\$1,250,000\$3,120,000a \$24,000 × 350; \$24,000 × 520c\$10,000 × 150; \$10,000 × 30b\$10,000 × 500; \$10,000 × 400d \$3,000 × 350; \$3,000 × 5209-1(b)Absorption costingApril 2011May 2011Revenuesa\$8,400,000\$12,480,000Cost of goods soldBeginning inventory\$ \$2,100,000Variable manufacturing costsb5,000,0004,000,000Allocated fixed manufacturing costsc2,000,0001,600,000Cost of goods available for sale7,000,0007,700,000Deduct ending inventoryd(2,100,000)(420,000) Adjustment for prod.-vol. variancee400,000UCost of goods sold4,900,0007,680,000Gross margin3,500,0004,800,000Operating costsVariable operating costsf1,050,0001,560,000Fixed operating costs600,000600,000Total operating costs1,650,0002,160,000Operating income\$1,850,000\$ 2,640,000a\$24,000 × 350; \$24,000 × 520d\$14,000 × 150; \$14,000 × 30b\$10,000 × 500; \$10,000 × 400e\$2,000,000 – \$2,000,000; \$2,000,000 – \$1,600,000c\$4,000 × 500; \$4,000 × 400f\$3,000 × 350; \$3,000 × 5202.– = – April:\$1,850,000 – \$1,250,000=(\$4,000 × 150) – (\$0)\$600,000=\$600,000May:\$2,640,000 – \$3,120,000=(\$4,000 × 30) – (\$4,000 × 150)– \$480,000=\$120,000 – \$600,000– \$480,000=– \$480,000The 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).9-29-17(20 min.)Throughput costing (continuation of Exercise 9-16).1.April 2011May 2011Revenuesa\$8,400,000\$12,480,000Direct material cost of goods soldBeginning inventoryDirect materials in goods manufacturedb\$ 3,350,000\$1,005,0002,680,000Cost of goods available for saleDeduct ending inventoryc3,350,000(1,005,000)3,685,000(201,000)Total direct material cost of goods soldThroughput marginOther costs2,345,0006,055,0003,484,0008,996,000...
View Full Document

## This note was uploaded on 02/16/2012 for the course ACCOUNTING 331 taught by Professor Hubert during the Spring '12 term at Drexel.

### Page1 / 46

S11 - 9-16(30 min Variable and absorption costing...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online