Prepare income statements using both variable and absorption costing for sales of 20,000 unit in 2019 for production 30,000 units. Does the amount of income differ between the variable cost methods and the absorption method? Explain. Income report under variable cost method shows that; When the units produced equal units sold in 2018 (30,000 units), the income is $594,000. Furthermore, the income was $388,000 in 2020 as well, when units produced were 8,000 less than units sold. Managers make a decision to convert reports under variable costs to absorption method reports.

Prepare income statements using both variable and absorption costing for sales of 20,000 unit in 2019 for production 30,000 units. Does the amount of income differ between the variable cost methods and the absorption method? Explain. Income report under variable cost method shows that; When the units produced equal units sold in 2018 (30,000 units), the income is $594,000. Furthermore, the income was $388,000 in 2020 as well, when units produced were 8,000 less than units sold. Managers make a decision to convert reports under variable costs to absorption method reports.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Schedule of Activity Costs Quality Control Activities Process audits Training of machine operators Processing returned products Scrap processing (disposal) Rework Preventive maintenance Product design Warranty work Finished goods inspection Activity Cost $50,000 28,000 19,000 25,000 8,000 30,000 46,000 12,000 23,000 From the provided schedule of activity costs, determine the value-added costs. A.$177,000 B.$191,000 C.$156,000 D.$104,000
Cost per Equivalent Unit The cost of direct materials transferred into the Rolling Department of Kraus Company is $459,000. The conversion cost for the period in the Rolling Department is $303,800. The total equivalent units for direct materials and conversion are 2,700 tons and 4,900 tons, respectively. Determine the direct materials and conversion costs per equivalent unit. Direct materials cost per equivalent unit: $fill in the blank 1 per ton Conversion cost per equivalent unit: $fill in the blank 2 per ton
Service Department Operating Department Physical Administration Assembly $ 127,160 Testing $ 737,860 Plant $ 26,220 $ 78,860 Departmental costs Employee time Space occupied 1,000 1,000 4,000 25,000 12,000 9,000 37,000 6,000 Administration Department costs are allocated first on the basis of employee time and Physical Plant Department costs are allocated second on the basis of space occupied. The total Testing Department cost after allocations is closest to: Multiple Choice $754,279 $757,240 $748,960 $757,368
Per set of soles, stitching costs are as follows: Direct materials Direct labor Variable overhead $6 Division fixed costs $4 Polishing's costs per completed pair of shoes are: Direct materials Direct labor Variable overhead Division fixed costs $10 A. $880,000 B. $800,000 C. $720,000 D. $896,000 $8 $14 $6 Assuming 40,000 soles are made and delivered to the Waxing Division at a transfer price of 180 percent of the Stitching Division's total costs per pair of shoes. Operating income for the Stitching Unit is $. $4 $16
Compute conversion costs given the following data: direct materials, $397,000; direct labor, $192,200; factory overhead, $201,100 and selling expenses, $36,800. a.$393,300 b.$164,300 c.$790,300 d.$598,100
Compute the unit cost for materials when beginning work in process is $965, current period costs are $12,835, and equivalent units for the department are 4,000. a. $3.45 b. $3.21 c. $0.24 d. $34.50
Cost per Equivalent Unit The cost of direct materials transferred into the Rolling Department of Oak Ridge Steel Company is $462,800. The conversion cost for the period in the Rolling Department is $286,700. The total equivalent units for direct materials and conversion are 2,600 tons and 4,700 tons, respectively. Determine the direct materials and conversion costs per equivalent unit. Direct materials cost per equivalent unit: $fill in the blank 1 per ton Conversion cost per equivalent unit: $fill in the blank 2 per ton
ssume the following information: Milling Department Materials Conversion Total Cost of beginning work in process inventory $ 10,000 $ 15,000 $ 25,000 Costs added during the period 291,600 394,500 686,100 Total cost $ 301,600 $ 409,500 $ 711,100 Assume the equivalent units of production for materials and conversion, when using the weighted-average method, are 5,200 units and 5,000 units, respectively. If the equivalent units in ending work in process inventory for materials and conversion are 400 units and 200 units, respectively, then what is the total cost of ending work in process for the Milling Department?
Compute conversion costs given the following data: direct materials, $359,700; direct labor, $190,200; factory overhead, $197,100 and selling expenses, $47,700. a. $747,000 b. $149,400 c. $387,300 d. $556,800
Direct labor Direct materials Overhead Total variable overhead Total fixed overhead Expected units to be produced Product cost per unit under absorption costing $ SA GA $ 17 per unit 11 per unit $30,000 $100,000 50,000 units
Compute conversion costs given the following data: direct materials, $354,200; direct labor, $207,800; factory overhead, $193,000 expenses, $45,200. Oa. $755,000 Ob. $147,800 Oc. $400,800 Od. $547,200
Cost per Equivalent Unit The cost of direct materials transferred into the Rolling Department of Jabari Company is $6,000,000. The conversion cost for the period in the Rolling Department is $925,200. The total equivalent units for direct materials and conversion are 16,000 tons and 15,420 tons, respectively. Determine the direct materials and conversion costs per equivalent unit. Direct materials cost per equivalent unit: $ Conversion cost per equivalent unit:: per ton per ton