Variable costing january 2014 february 2014 march

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Supply Chain Management: A Logistics Perspective
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Chapter 13 / Exercise 8
Supply Chain Management: A Logistics Perspective
Coyle/Langley
Expert Verified
Variable CostingJanuary 2014February 2014March 2014Revenuesa$4,550,000$4,812,500$5,092,500Variable costsBeginning inventoryb$ 0$ 95,000$ 95,000Variable manufacturing costsc1,330,0001,306,2501,358,500Cost of goods available for saleDeduct ending inventoryd1,330,000(95,000)1,401,250(95,000)1,453,500(71,250)Variable cost of goods soldVariable operating costseTotal variable costs1,235,000942,5002,177,5001,306,250996,8752,303,1251,382,2501,054,8752,437,125Contribution marginFixed costsFixed manufacturing costsFixed operating costsTotal fixed costsOperating income490,000120,0002,372,500610,000$1,762,500490,000120,0002,509,375610,000$1,899,375490,000120,0002,655,375610,000$2,045,375a $3,500 × 1,300; $3,500 × 1,375; $3,500 × 1,455b $? × 0; $950 × 100; $950 × 100c$950 × 1,400; $950 × 1,375; $950 × 1,430d$950 × 100; $950 × 100; $950 × 75e$725 × 1,300; $725 × 1,375; $725 × 1,4559-9
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Supply Chain Management: A Logistics Perspective
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Chapter 13 / Exercise 8
Supply Chain Management: A Logistics Perspective
Coyle/Langley
Expert Verified
(b)Absorption CostingJanuary 2014February 2014March 2014RevenuesaCost of goods soldBeginning inventoryb$ 0$4,550,000$ 130,000$4,812,500$ 130,000$5,092,500Variable manufacturing costsc1,330,0001,306,2501,358,500Allocated fixed manufacturing costsd490,000481,250500,500Cost of goods available for sale1,820,0001,917,5001,989,000Deduct ending inventorye(130,000)(130,000)(97,500)Adjustment for prod. vol. var.f08,750U(10,500)FCost of goods sold1,690,0001,796,2501,881,000Gross margin2,860,0003,016,2503,211,500Operating costsVariable operating costsg942,500996,8751,054,875Fixed operating costs120,000120,000120,000Total operating costs1,062,5001,116,8751,174,875Operating income$1,797,500$1,899,375$2,036,625a $3,500 × 1,300; $3,500 × 1,375; $3,500 × 1,455b $?× 0; $1,300 × 100; $1,300 × 100c$950 × 1,400; $950 × 1,375; $950 × 1,430d$350 × 1,400; $350 × 1,375; $350 × 1,430e$1,300 × 100; $1,300 × 100; $1,300 × 75f $490,000 – $490,000; $490,000 – $481,250; $490,000 – $500,500g $725 × 1,300; $725 × 1,375; $725 × 1,4559-10
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9-19 (20–30 min.) Throughput costing(continuation of Exercise 9-18).The variable manufacturing costs per unit of Crystal Clear Corporation are as follows:Required:1.Prepare income statements for Crystal Clear in January, February, and March 2014 underthroughput costing.2.Contrast the results in requirement 1 with those in requirement 1 of Exercise 9-18.3.Give one motivation for Crystal Clear to adopt throughput costing.SOLUTION1.JanuaryFebruaryMarchRevenuesaDirect material cost of goods soldBeginning inventoryb$ $4,550,000$55,000$4,812,500$ 55,000$5,092,500Direct materials in goods manufacturedcCost of goods available for saleDeduct ending inventorydTotal direct materialcost of goods sold770,000770,000(55,000)715,000756,250811,250(55,000)400,000786,500841,500(41,250)800,250Throughput margin3,835,0004,056,2504,292,250Other costsManufacturingeOperatingfTotal other costsOperating income1,050,0001,062,5002,112,500$1,722,5001,040,0001,116,8752,156,875$1,899,3751,062,0001,174,8752,236,875$2,055,375a$3,500 × 1,300; $3,500 × 1,375; $3,500 × 1,455b$? × 0; $550 × 100; $550 × 100c$550 × 1,400; $550 × 1,375; $550 × 1,430d$550 × 100; $550 × 100; $550 ×75e($400 × 1,400) + $490,000; ($400 × 1,375) + $490,000; ($400 × 1,430) + $490,000f($725 × 1,300) + $120,000; ($725 × 1,375) + $120,000; ($725 × 1,455) + $120,000
0
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2.Operating income under:JanuaryFebruaryMarchVariable costingAbsorption costingThroughput costing$1,762,5001,797,5001,722,500$1,899,3751,899,3751,899,375$2,045,3752,036,6252,055,375Throughput costing puts greater emphasis on sales as the source of operating income than doesabsorption or variable costing. Accordingly, income under throughput costing is highest inperiods where the number of units sold is relatively large (as in March) and lower in periods ofweaker sales (as in January).3.Throughput costing puts a penalty on producing without a corresponding sale in the same

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