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# cost of goods sold

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Unformatted text preview: .............................. Cost of goods sold ............................................. Year 1 \$ 572,000 195,000 \$ 377,000 Year 2 \$ 660,000 225,000 \$ 435,000 (120,000) (163,800) \$ 93,200 (120,000) (163,800) \$ 151,200 \$ \$ 30,000 195,000 \$225,000 0 \$ 225,000 0 225,000 \$ 225,000 30,000 \$ 195,000 Firm performance has improved from Year 1 to Year 2. 3. Year 1 fixed overhead rate = \$120,000/30,000 = \$4.00 4. Absorption-costing inventory = (\$7.50 + \$4.00) × 4,000 = \$46,000 Variable-costing inventory = \$7.50 × 4,000 = \$30,000 10–19 332 1. Ziemble Company Absorption-Costing Income Statement Sales ........................................................................................... Cost of goods sold* .................................................................. Gross margin ............................................................................. Selling and administrative expenses ...................................... Net income ........................................................................... \$ 1,512,000 1,048,000 \$ 464,000 444,000 \$ 20,000 *Fixed overhead rate = \$300,000/75,000 = \$4 per unit Applied fixed overhead = \$4 × 74,000 = \$296,000 Underapplied fixed overhead = \$300,000 – \$296,000 = \$4,000 Cost of goods sold = (\$4 × 72,000) + \$4,000 + \$756,000 = \$1,048,000 2. The difference is \$8,000 (\$20,000 – \$12,000) and is due to the fixed overhead that would be attached to the ending inventory (\$4 × 2,000 units). IA – IV = Fixed overhead rate(Production – Sales) \$20,000 – \$12,000 = \$4(74,000 – 72,000) \$8,000 = \$8,000 333 10–20 1. Scented Sales \$ 13,000 Less: Variable expenses 9,100 Contribution margin \$ 3,900 Less: Direct fixed expenses 4,250 Product margin \$ (350) Less: Common fixed expenses Net (loss) Musical \$ 19,500 15,600 \$ 3,900 5,750 \$ (1,850) Regular \$ 25,000 12,500 \$ 12,500 3,000 \$ 9,500 Total \$ 57,500 37,200 \$ 20,300 13,000 \$ 7,300 7,500 \$ (200) Kathy should accept this proposal. The 30 percent sales increase, coupled with the increased advertising, reduces the loss from \$1,000 to \$200....
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