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Accounting Two Questions Solution




Question;1. (TCO C) Silver City, Inc., has collected the following operating information below for its current months activity. Using this information, prepare a flexible budget analysis to determine how well Silver City performed in terms of cost control.Actual Costs IncurredStatic Budget Activity level (in units)5,205178Variable Costs:Indirect materials$24,182$23,476Utilities$22,356$22,674Fixed Costs:Administration$63,450$65, 5002Rent$65,317$63,9042. (TCO E) Mesa Company produces a single product. Operating data for the company and its absorption costing income statement for the last year are presented below:Units in beginning inventory 2,000Units produced 9,000Units sold 10,000Sales$100,000Less cost of goods sold: Beginning inventory 12,000Add cost of goods manufactured 54,000Goods available for sale 66,000Less ending inventory 6,000Cost of goods sold 60,000Gross margin 40,000Less selling and admin. expenses 28,000Net operating income $12,000Variable manufacturing costs are $4 per unit.Fixed factory overhead totals $18,000 for the year.This overhead was applied at a rate of $2 per unit.Variable selling and administrative expenses were $1 per unit sold.Required: Prepare a new income statement for the year using variable costing. Comment on the differences between the absorption costing and the variable costing income statements.


Paper#42553 | Written in 18-Jul-2015

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