b) What are the total product costs for the company under absorption costing?Problem 11 – 10 Marks During 2012 EKP Ltd. produced 40,000 units and sold 30,000 for $15 per unit. Variable manufacturing costs were $7 per unit. Annual fixed manufacturing overhead was $40,000 ($1 per unit). Variable selling and administrative costs were $2 per unit sold, and fixed selling and administrative costs were $70,000. a) What is the unit COGS under variable costing versus absorption costing.b) Prepare a variable costing income statement.b) Prepare an absorption costing income statement.Page 5of 6
Problem 12 – 20 Marks Momentum Bikes manufactures a basic road bicycle. Production and sales data for the most recent year are as follows (no beginning inventory):Variable production costs$85 per bikeFixed production costs$530,000Variable selling & administrative costs$17 per bikeFixed selling & administrative costs$480,000Selling price$195 per bikeProduction21,200 bikesSales19,000 bikesInstructionsa.Prepare a brief income statement using absorption costing.b.Calculate the amount to be reported for inventory in the year end absorption costing balance sheet.c.Prepare a brief income statement using variable costing.d.Calculate the amount to be reported for inventory in the year end variable costing balance sheet.Problem 13 – 15 Marks Conan Company produces sporting equipment. In 2011, the first year of operations, Conan produced 25,000 units and sold 18,000 units. In 2012, the production and sales results were exactly reversed. In each year, selling price was $100, variable manufacturing costs were $40 per unit, variable selling expenses were $8 per unit, fixed manufacturing costs were $540,000, and fixed administrative expenses were $200,000.Instructionsa)Prepare an income statement for 2011 using variable costingb)Prepare an income statement for 2011 using absorption costing.c)Reconcile the differences each year in income from operations under the two costing approaches with reference to fixed costs.Reminder! All assignments MUSTbe typed and need: 1)Cover page with your name and 2)My name “Michael Lindsay” stating 3)Assignment No. 24)Subject Name and Number: “BAB240 - Managerial Accounting” and 5)The Due Date. Late assignments will be penalized 20% per day Page 6of 6
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- Summer '18
- Math, Counting, Variable Manufacturing, B Division