18_InClassActivity_ShouldCableVisionServeMiranda

18_InClassActivity_ShouldCableVisionServeMiranda - ACC...

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ACC 333 (Farrell) Class 18 Fall 2011 Page 1 of 3 In-Class Activity – Should CableVision Serve Miranda? Part 1 – Prepare Simple Absorption Costing and Variable Costing Income Statements Assume that CableVision serves 30,000 subscribers in the Hamilton market each year, and charges each a sales price of $20. Coincidentally, CableVision also used 30,000 subscribers as the denominator for its pre-determined overhead rate for Hamilton. Costs to serve these subscribers are as follows: Direct materials $210,000 Direct labor 60,000 Expected and actual variable overhead 105,000 Expected and actual fixed overhead 120,000 Actual variable SG&A expenses 90,000 Actual fixed SG&A expenses 75,000 1) Using absorption costing, prepare an income statement for the year that includes total sales, cost of goods sold, gross margin, and operating profit (loss). Then, compute the per-subscriber sales, cost of goods sold, and gross margin. 2) Using variable costing, prepare an income statement for the year that includes total sales, variable costs, contribution margin, and operating profit (loss). Then, compute the per-subscriber sales, variable costs, and
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18_InClassActivity_ShouldCableVisionServeMiranda - ACC...

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