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ID: 2538160 • Letter: H
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http ://mail-google.com/ mail u/0/#inbox/1 61e4c506 423c62?projector=1&me; sageP aSerch 5) The following data is related to sales and production of the Tarkio Corporation for last year. Selling price per unit $60.00 25.00 6.00 $50,000 Variable manufácturing cost per unit Variable selling and administrative expense per unit Fixed manufacturing overhead (in total) Fixed selling and administrative expenses (in total) Units produced during year Units sold during year Units in beginning inventory Units in ending inventory 10,000 S,000 2,000 Required a. Prepare an income statement for last year using absorption costing b. Calculate the value of the ending inventory using absorption costing.l c. Prepare an income statement for last year using variable costing d. Calculate the value of the ending inventory using variable costing 6) The HF Corporation manufactures and sells toy syroscopes. The following data is related to sales and production of the toy gyroscopes for last year. S 800 Selling price per unit Variable manufacturing costs per unit Variable selling and sdministrative expenses per unit ixed selling and administrative expenses (in total) s 4 5 80,000 500,Explanation / Answer
Answer: Requirement 1 Income Statement under absorption costing Sales $ 480,000.00 (8,000*$60) Less: Cost of goods sold Variable manufacturig cost $ 200,000.00 (8,000*$25) Fixed manufacturing cost $ 50,000.00 $ 250,000.00 Gross profit $ 230,000.00 (480000-250000) Less: Selling and administrative expense Variable selling expense $ 48,000.00 (8,000*$6) Fixed selling expense $ 8,000.00 $ 56,000.00 Operating income $ 174,000.00 (230000-56000) Requirement 2 Cost of ending inventory of one unit =Variable manufacturing cost + Fixed manufacturing cost = $25 + $50,000/10,000 units $ 30.00 Cost of ending inventory -2000 units (Absorption costing) $ 60,000.00 (2,000*$30) Requirement 3 Income Statement under variable costing Sales $ 480,000.00 (8,000*$60) Less: Variable cost Variable manufacturig cost $ 200,000.00 (8,000*$25) Variable selling expense $ 48,000.00 $ 248,000.00 (8,000*$6) Contribution margin $ 232,000.00 (480000-248000) Less: Fixed Cost Fixed manufacturing cost $ 50,000.00 Fixed selling expense $ 8,000.00 $ 58,000.00 Operating profit $ 174,000.00 (232000-58000) Requirement 4 Cost of ending inventory -2000 units (Variable costing) $ 50,000.00 (2,000*$25)
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