BLT produces plastic that is used for injection molding applications such as gea
ID: 2352310 • Letter: B
Question
BLT produces plastic that is used for injection molding applications such as gears for small motors. In 2012, the first year of operations, BLT produced 6,492 tons of plastic and sold 5,410 tons. In 2013, the production and sales results were exactly reversed. In each year, selling price per ton was $1,300, variable manufacturing costs were 13% of the sales price of units produced, variable selling expenses were 0.08% of the selling price of units sold, fixed manufacturing costs were $2,726,640, and fixed administrative expenses were $502,300.Prepare comparative income statements for each year using variable costing. (If answer is zero, please enter 0. Do not leave any fields blank.)
Prepare comparative income statements for each year using absorption costing. (If answer is zero, please enter 0. Do not leave any fields blank.)
Reconcile the differences each year in income from operations under the two costing approaches. (If amount is a decrease, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Explanation / Answer
variable costing:
2012
2013
sales
7033000
8439600
variable costs:
variable manufacturing
914290
1097148
variable selling
562640
675168
total variable
1476930
1772316
contribution margin
5556070
6667284
fixed costs:
fixed manufacturing
2726640
2726640
fixed admin
502300
502300
total fixed
3228940
3228940
net income
2327130
3438344
absorption costing
2012
2013
sales
7033000
8439600
cost of goods sold:
variable manufacturing
914290
1097148
fixed manufacturing
2272200
3181080
cost of goods sold
3186490
4278228
gross margin
3846510
4161372
selling and admin:
selling
562640
675168
admin
502300
502300
selling and admin
1064940
1177468
net income
2781570
2983904
reconciliation
variable costing
2327130
3438344
fixed overhead difference
454440
-454440
(2,726,640/6492)*(6492-5410)
absorption costing
2781570
2983904
variable costing:
2012
2013
sales
7033000
8439600
variable costs:
variable manufacturing
914290
1097148
variable selling
562640
675168
total variable
1476930
1772316
contribution margin
5556070
6667284
fixed costs:
fixed manufacturing
2726640
2726640
fixed admin
502300
502300
total fixed
3228940
3228940
net income
2327130
3438344
absorption costing
2012
2013
sales
7033000
8439600
cost of goods sold:
variable manufacturing
914290
1097148
fixed manufacturing
2272200
3181080
cost of goods sold
3186490
4278228
gross margin
3846510
4161372
selling and admin:
selling
562640
675168
admin
502300
502300
selling and admin
1064940
1177468
net income
2781570
2983904
reconciliation
variable costing
2327130
3438344
fixed overhead difference
454440
-454440
(2,726,640/6492)*(6492-5410)
absorption costing
2781570
2983904
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.