x Module 1: Variable Costir x Connect e - x Minbox (530) - denselynn € ? e Secur

Question

x Module 1: Variable Costir x Connect e - x Minbox (530) - denselynn € ? e Secure * 5MYCTC - Ozarks Technica * 5MYOTC https://newcornect.mhieducation.com/flow/connect.html @ Lesson 4 Homework i Seved Help Seve & Exit Submit Check my work LO Tami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University points $ 762,309 Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (21,998 units) Vardable expenses: Variable cost of goods sold Variable selling and adninistrativo 164,850 Contribution margin Fixed expenses : Fixed manufacturing overhead 199,202 Fixed selling and administrative 216,692 Net operating luss 414,758 347,550 Print S (57.650) Ms Tyler is discouraged over the lass shown for the quarter particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA. Insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter. At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow Units produced Units sold Variable costs per unit: 24, Dee 21,00 Direct labor Variable manufacturing overhead Variable selline and administrative $ $ $ $ 7.28 2.8 1.99 7.85 Required: 1. Complete the following: a. Compute the unit product cost under absorption costing b. What is the companys absorption costing nct operating income loss) for the quarter? : Type here to search 0 - 9 e 3 w Pix] ABNE N AD.) " 0 7 1:06 I'M /1/2018

Explanation / Answer

Construct The Absorption Costing Unit Product Cost Year 1 Direct Material 7.20 Direct labour 2.80 Variable Manufacturing overheads 1.90 Fixed Manufacturing overheads 8.30 (199200/24000 units) Absorption costing unit prroduct cost 20.20 Construct the Absorption Costing Income Statement Under FIFO Year 1 Sales $762,300 Cost of Goods sold 424200 Gross Margin $338,100 Selling and distribution expense 380,850 Net operating income -42,750 Reconciliation Statement Income as per Variable costing -67650 Add: Fixed OH deferred (3000 units @8.30) 24900 Income as per Absorption costing -42750 Req b: Construct The Variable Costing Income Statement under FIFO YEAR 2 Sales 980,100 Less: Variable cost    variable cost of goods sold 321,300    Variable selling expense 211,950 533,250 Contribution margin 446,850 Fixed expense:    Fixed Manufacturing overheads 199,200    Fixed selling expense 216,000 Net operating Income 31,650 Construct the Absorption Costing Income Statement Under FIFO Year 2 Sales $980,100 Cost of Goods sold 545400 Gross Margin $434,700 Selling and distribution expense 427,950 Net operating income 6,750 Reconciliation Statement: Income as per Variable costing 31650 Less: Fixed OH released (3000*8.30) -24900 Income as per Absorption costing 6750

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