B-23.03 Problem

B-23.03 Problem - 30,000,000 $ Fixed manufacturing costs...

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B-23.03 S l (9 000 X 000) 45 000 000 $ GoWay manufacturers and sells a portable battery-powered transportation device that can be stored in a backpack. The device usually sells for $5,000 per unit. The company normally sells units as quickly as manufactured and does not maintain a finished goods inventory. However, during the most recent year, the company produced 10,000 units, but only sold 9,000. A military customer has requested to buy the other 1,000 units for delivery on December 31 of the year current year. The offered price is $4,000 per unit for all 1,000 units. Below are absorption-costing based calculations of ending inventory and net income, based on the 9,000 units already sold. Variable manufacturing costs ($3,000 X 10,000)
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Unformatted text preview: 30,000,000 $ Fixed manufacturing costs 12,000,000 Cost of goods manufactured 42,000,000 $ Cost of goods sold ($42,000,000 X (9,000/10,000)) 37,800,000 Ending inventory ($42,000,000 X (1,000/10,000)) 4,200,000 $ (9 000 X $5 000 a es , $5, , , Cost of goods sold 37,800,000 Gross profit 7,200,000 $ Selling, general, & administrative costs Variable (9,000 X $100) 900,000 $ Fixed 5,800,000 6,700,000 Net income 500,000 $ Prepare a revised absorption-costing based income statement, assuming acceptance of the 1,000 unit order. Also prepare variable-costing income statements (with and without the order). Compare the results and evaluate whether the order should be accepted....
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This note was uploaded on 02/29/2012 for the course ACCOUNTING 101 taught by Professor Hudack during the Spring '11 term at FIU.

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