Exercise 84 Momentum Bikes manufactures a basic road bicycle Production and

# Exercise 84 momentum bikes manufactures a basic road

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Exercise 84Momentum 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 variable costing.b)Calculate the amount to be reported for inventory in the year end variable costing balance sheet. Solution 84 (8–12 min.)
Exercise 85Conan Company produces sporting equipment. In 2015, the first year of operations, Conan produced 25,000 units and sold 18,000 units. In 2016, 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)Calculate net income under variable costing for each year.b)Calculate net income under absorption costing for each year.c)Reconcile the differences each year in income from operations under the two costing approaches. Solution 85 (20–25 min.) Exercise 86 Conan Company produces sporting equipment. In 2015, the first year of operations, Conan produced 25,000 units and sold 18,000 units. In 2016, 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 2015 using variable costing.b)Prepare an income statement for 2015 using absorption costing.c)Reconcile the differences each year in income from operations under the two costing approaches. Solution 86 (15–20 min.) a) Conan Company

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