week 4 - 7-14 Prepare and Reconcile Variable Costing...

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Unformatted text preview: 7-14 Prepare and Reconcile Variable Costing Statements1.Determine the unit product cost under:a.Absorption costing for May and JuneDirect Materials $6Direct Labor$12Variable Manufacturing Overhead$4Fixed Manufacturing Overhead($240,000/30,000)$8Unit Product Cost$30b.Variable costing for May and JuneDirect Materials$6Direct Labor$12Variable Manufacturing Overhead$4Unit Product Cost$222.Prepare variable costing income statements for May and June using the contribution approach.Linden CompanyIncome Statement ending May 31.Sales(26,000*40)1,040,000Variable expenses: Variable costs of goods sold(26,000*22)572,000Variable selling & administrative expenses (26,000*3)78,000 650,000Contribution Margin 390000Fixed Expenses:Fixed Manufacturing Overhead 240,000Fixed Selling and administrative expenses180,000420,000Net operating income(30,000)Linden CompanyIncome Statement ending June 30thSales(34,000*40)1,360,000Variable expenses: Variable costs of goods sold(34,000*22)748,000Variable selling & administrative expenses (34,000*3)102,000 850,000Contribution Margin 510,000Fixed Expenses:Fixed Manufacturing Overhead 240,000Fixed Selling and administrative expenses180,000420,000 Net operating income90,0003.Reconcile the variable costing and absorption costing net operating income figures.May JuneVariable costing net operating income (30,000) 90,000Add fixed manufacturing overhead costs deferredIn inventory under absorption costing ( 120,000 units x $ 8 ) 960,000 Deduct fixed manufacturing overhead costs released from Inventory under absorption costing ( 120,000 units x $ 8) Absorption costing net operating income 930,000 90,0004.The companys Accounting Department has determined the break-even point to be 28,000 units per month, computed as follows:Fixed cost per month =$420,000 = 28,000 UnitsUnit contribution margin $15 per unitUpon receiving this figure, the president commented, Theres something peculiar...
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This note was uploaded on 03/16/2012 for the course ACC 571 taught by Professor Wills during the Spring '09 term at Strayer.

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week 4 - 7-14 Prepare and Reconcile Variable Costing...

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