Frigid Motors Inc. assembles and sells snowmobile engines. The company began ope
ID: 2567729 • Letter: F
Question
Frigid Motors Inc. assembles and sells snowmobile engines. The company began operations on July 1, 2016, and operated at 100% of capacity during the first month. The following data summarize the results for July:
Question not attempted.
1
Sales (32,000 units)
$8,000,000.00
2
Production costs (41,000 units):
3
Direct materials
$3,280,000.00
4
Direct labor
2,255,000.00
5
Variable factory overhead
1,025,000.00
6
Fixed factory overhead
615,000.00
7,175,000.00
7
Selling and administrative expenses:
8
Variable selling and administrative expenses
$1,180,000.00
9
Fixed selling and administrative expenses
210,000.00
1,390,000.00
none
X
Labels and Amount Descriptions
In CengageNOW, a Label is a text entry that does not have an amount associated with it.
In CengageNOW, an Amount Description is a text entry other than an Account that has an amount associated with it.
none
X
Absorption Costing Income Statement
Shaded cells have feedback.
A. Prepare an income statement according to the absorption costing concept. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Enter all amounts as positive numbers.
Question not attempted.
Score: 0/45
Frigid Motors Inc.
Absorption Costing Income Statement
1
2
3
4
5
Solution
Frigid Motors Inc.
Absorption Costing Income Statement
1
2
3
4
5
Points:
0 / 11
Feedback
Check My Work
Under absorption costing, the cost of goods manufactured includes direct materials, direct labor, and factory overhead costs. Both fixed and variable factory costs are included as part of factory overhead.
Explanation
none
X
Variable Costing Income Statement
Shaded cells have feedback.
B. Prepare an income statement according to the variable costing concept. A colon (:) will automatically appear if it is required. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. Enter all amounts as positive numbers.
Question not attempted.
Score: 0/81
Frigid Motors Inc.
Variable Costing Income Statement
1
2
3
4
5
6
7
8
9
Solution
Frigid Motors Inc.
Variable Costing Income Statement
1
2
3
4
5
6
7
8
9
Please show work, thank you!
1
Sales (32,000 units)
$8,000,000.00
2
Production costs (41,000 units):
3
Direct materials
$3,280,000.00
4
Direct labor
2,255,000.00
5
Variable factory overhead
1,025,000.00
6
Fixed factory overhead
615,000.00
7,175,000.00
7
Selling and administrative expenses:
8
Variable selling and administrative expenses
$1,180,000.00
9
Fixed selling and administrative expenses
210,000.00
1,390,000.00
Explanation / Answer
A.
B.
C. As can be seen from the calculation below, the fixed manufacturing overhead of $135,000 is absorbed in ending inventory under absorption costing, thereby reducing the final expenses and increasing the net operating income.
Since under variable costing , the fixed costs are not included in inventory valueation the amount of $135,000 is added to the expenses thereby reducing the net operating income.
FRIGID MOTORS INC. Absorption costing Income Statement Sales 8000000 Cost of goods sold Direct material 3280000 Direct labor 2255000 Variable factory overhead 1025000 Fixed factory overhead 615000 Total factory cost 7175000 Less: Ending inventory -1575000 Cost of goods sold 5600000 Gross margin 2400000 Selling and administrative expenses Variable expenses 1180000 Fixed expenses 210000 Total selling and administrative expenses 1390000 Net operating income 1010000Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.