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Accounting Two Questions




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 Incurred;Static Budget Activity level (in units);5,205;178;Variable Costs;Indirect materials;$24,182;$23,476;Utilities;$22,356;$22,674;Fixed Costs;Administration;$63,450;$65, 5002;Rent;$65,317;$63,904;2. (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 2,000;Units produced 9,000;Units sold 10,000;Sales$100,000;Less cost of goods sold: Beginning inventory 12,000;Add cost of goods manufactured 54,000;Goods available for sale 66,000;Less ending inventory 6,000;Cost of goods sold 60,000;Gross margin 40,000;Less selling and admin. expenses 28,000;Net operating income $12,000;Variable 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#43101 | Written in 18-Jul-2015

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