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Managerial Accounting 1B Ch19

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Question;Managerial Accounting 1B;Financial;and Managerial Accounting;Chapter 19;1.;Exercise 19-1 Income reporting under absorption costing and;variable costing L.O. P2;Adams Company, a manufacturer of;in-home decorative fountains, began operations on September 1 of the current;year. Its cost and sales information for this year follows.;Production costs;Direct;materials;$;40;per unit;Direct;labor;$;60;per unit;Overhead;costs for the year;Variable;overhead;$;3,000,000;Fixed;overhead;$;7,000,000;Nonproduction costs;for the year;Variable;selling and administrative;$;770,000;Fixed;selling and administrative;$;4,250,000;Production and sales;for the year;Units;produced;100,000;units;Units;sold;70,000;units;Sales;price per unit;$;350;per unit;1.;Prepare an income statement for;the company using absorption costing.(Input;all amounts as positive values except net loss which should be indicated with;a minus sign. Omit the "$" sign in your response.);2.;Prepare an income statement for;the company using variable costing.(Input;all amounts as positive values except net loss which should be indicated with;a minus sign. Omit the "$" sign in your response.);3.;Under what circumstance(s) is;reported income identical under both absorption costing and variable costing?;Exercise 19-4 Income reporting under absorption costing and;variable costing L.O. P2;[The following information applies to the questions displayed;below.];Woodson Company, a producer of;solid oak tables, reports the following data from its current year;operations, which is its second year of business.;2.Exercise 19-4 Part;1;1.;Prepare the current year income;statement for the company using absorption costing.(Input all amounts as positive values except net loss which;should be indicated with a minus sign. Leave no cells blank - be certain to;enter "0" wherever required. Omit the "$" sign in;your response.);3.Exercise 19-4 Part;2;2.;Prepare the current year income;statement for the company using variable costing.(Input all amounts as positive values except net loss which;should be indicated with a minus sign. Leave no cells blank - be certain to;enter "0" wherever required. Omit the "$" sign in your;response.);4.Exercise 19-6;Converting variable costing income to absorption costing income L.O. P2, P4;Lyon Furnaces prepares the income;statement under variable costing for its managerial reports, and it prepares;the income statement under absorption costing for external reporting. For its;first month of operations, 375 furnaces were produced and 225 were sold, this;left 150 furnaces in ending inventory. The income statement information under;variable costing follows.;Sales (225 ? $1,600);$;360,000;Variable production;cost (225 ? $625);140,625;Variable selling and;administrative expenses (225 ? $65);14,625;Contribution margin;204,750;Fixed overhead cost;56,250;Fixed selling and administrative;expense;75,000;Net income;$;73,500;1.;Prepare this company's income;statement for its first month of operations under absorption costing.(Input all amounts as positive values except net loss which;should be indicated with a minus sign. Omit the "$" sign in your;response.);5.;Exercise 19-9 Contribution margin format income statement L.O.;P3;Polarix is a retailer of ATVs (all;terrain vehicles) and accessories. An income statement for its Consumer ATV;Department for the current year follows. ATVs sell, on average, for $3,800.;Variable selling expenses are $270 each. The remaining selling expenses are;fixed. Administrative expenses are 40% variable and 60% fixed. The company;does not manufacture its own ATVs, it purchases them from a supplier for;$1,830 each.;POLARIX;Income Statement?Consumer ATV Department;For Year Ended December 21, 2011;Sales;$;646,000;Cost of goods sold;311,100;Gross margin;334,900;Operating expenses;Selling;expenses;$;135,000;Administrative;expenses;59,500;194,500;Net income;$;140,400;Required;1.;Prepare an income statement for;this current year using the contribution margin format.(Input all amounts as positive values except net loss which;should be indicated with a minus sign. Omit the "$" sign in your;response.);2.;For each ATV sold during this;year, what is the contribution toward covering fixed expenses and that toward;earning income?(Omit the "$" sign;in your response.);Contribution margin;per ATV;6.;Exercise 19-11 Absorption costing and over-production L.O. C2;Rourke Inc. reports the following;annual cost data for its single product.;Normal production and;sales level;60,000;units;Sales price;$;56.00;per unit;Direct materials;$;9.00;Direct labor;$;6.50;per unit;Variable overhead;$;11.00;per unit;Fixed overhead;$;720,000;in total;If Rourke increases its production;to 80,000 units, while sales remain at the current 60,000 unit level, by how;much would the company?s gross margin increase or decrease under absorption;costing? Assume the company has idle capacity to double current production.(Omit the;$" sign in your response.);Gross margin;7.Problem 19-1A;Variable costing income statement and conversion to absorption costing income;L.O. P2, P4;Torres Company began operations;this year. During this first year, the company produced 100,000 units and;sold 80,000 units. The absorption costing income statement for its first year;of operations follows.;Additional Information;a.;Selling and administrative;expenses consist of $350,000 in annual fixed expenses and $2.25 per unit in;variable selling and administrative expenses.;b.;The company's product cost of $30;per unit is computed as follows.;Direct materials;$;5;per unit;Direct labor;$;14;per unit;Variable overhead;$;2;per unit;Fixed overhead;($900,000 / 100,000 units);$;9;per unit;Required;1.;Prepare an income statement for;the company under variable costing.(Input;all amounts as positive values except net loss which should be indicated with;a minus sign. Omit the "$" sign in your response.)

 

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