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3 years ago

Exercise 7-9 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2, LO7-3]

Business

1 answer:

Reil [10]3 years ago

6 0

Answer:

1 a. Year 1 unit product cost = 45

Year 2 unit product cost = 45

Notes: Unit product cost = Direct materials + direct labor + Variable manufacturing overhead = 25 + 15 + 5 = 45 units

1 b. Income statement

Year 1 Year 2

Sales 2,400,000 3,000,000

(40000*60); (50000*60)

Less:

Variable cost of goods sold 1,800,000 2,250,000

Variable selling and adm. 80,000 100,000

Contribution margin 520,000 650,000

Less:

Fixed manufacturing overhead 250,000 250,000

Fixed selling & adm expense 80,000 80,000

Net income $190,000 $320,000

2 a. Notes

Year 1 Year 2

Direct materials 25 25

Direct labor 15 15

Variable manufacturing overhead 5 5

Fixed manufacturing overhead 5 6.25

(250,000/50,000); (250,000/40000)

Unit product cost 50 51.25

b. Income statement

Year 1 Year 2

Sales 2400000 3000000

Less: cost of goods sold 2000000 2550000

Gross margin 400,000 450,000

Less: Selling and 160,000 180,000

administrative expense

Net income 240,000 270,000

Workings

Cost of goods sold for year 2 = (10,000* 50) + (40000 * 51.25)

= 500,000 + 2,050,000

= 25,500,000

3. Reconciliation Year 1 Year 2

Variable costing net operating 190,000 320,000

income (loss)

Add: Deferred fixed overhead 50,000

in ending inventory (10000*5)

Less: Fixed overhead realized -50,000

in beginning inventory(10000*5)

Absorption costing net operating $240,000 270,000

income (loss)

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Answer:

The question is incomplete, the options are missing. The options are the following:

a) Suggest to Patrice that spreading negative information learned from eavesdropping is not healthy for the workplace.

b) Thank Patrice for speaking up and forward the item to a neutral third party for handling.

c) Immediately fire the team members who made the comments.

d) Contact the team member who was the subject of the comments to see if he or she was offended.

e) Thank Patrice for her input, but based on the harmlessness of the situation, take no further action.

And the correct answer is the option B: Thank Patrice for speaking up and forward the item to a neutral third party for handling.

Explanation:

To begin with, these kind of situations are most common than expected in the workplace so that is why that nowadays exist a lot of seminars about certain subjects that involves the behavior in the organization and furthermore there is the regular action of the Human Resources Department that takes cares of all the penalties and the solutions when it comes to subjects regarding the employees of the business and their relationship both with each other and with the company. So the correct way to act in this scenario would be to thank Patrice and tell her that the manager would inform to the Human Resources Department about it, being this last one a third party in the situation itself.

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3 years ago

You receive an invoice for $565.00 with terms 3/10, net 30. If you pay it immediately, how much will you pay

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565 x 3% = $16.95

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2 years ago

Describe a real or made up but realistic example of a product that went through a time of scarcity, when demand was greater than

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Answer:

An example of a product going through scarcity is when heavy rainfall and flooding destroy crops because of which their supply is decreased, and because of this shortage their prices sky rocket or increase very fast.

Explanation:

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3 years ago

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3 years ago

Lansing, Inc. provides the following information for one of its department's operations for June (no new material is added in De

Eddi Din [679]

Answer:

See Explanation Below

Explanation:

Given

Beginning inventory units = 15,000 units

Beginning Inventory Completed = 60% completed

Current work = 35,000 units started

Ending inventory = 5,000 units

Ending inventory completed = 20% completed

Using FIFO, the production cost report is as follows

First, we determine the physical flow of units;.

This is listed out as follows;

Beginning WIP Inventory: 15,000 units

Unit started this period: 35,000 units

Total units to account for = 50,000 units

Units completed and transferred out: 45,000 units

Ending WIP Inventory: 5,000 units

Total accounted units: 50,000 units

Unit completed and transferred out is calculated by;

Total units to account for - Ending WIP Inventory

= 50,000 units - 5,000 units

= 45,000 units

Calculating the EUP (Equivalent Unit of Production)

Equivalent Unit to complete beginning WIP Inventory

Direct Materials: 15,000 (100% - 100%) = 0 EUP (Direct)

Conversions: 15,000 (100% - 60%) = 6,000 EUP (Conversion)

Equivalent Unit started and completed: 30,000 EUP (Direct)

Equivalent Unit started and completed: 30,000 EUP (Conversion)

Equivalent Unit in ending WIP Inventory:

Direct: 5,000 units * 100% = 5,000 EUP (Direct)

Conversion: 5,000 * 20% = 1,000 EUP (Conversion)

Total Equivalent Unit of Production: 0 EUP + 30,000 EUP + 5,000 EUP = 35,000 EUP (Direct)

Total Equivalent Unit of Production: 6,000 EUP + 30,000 EUP + 1,000 EUP = 37,000 EUP (Conversion)

Note that;

Equivalent Unit started and completed is calculated as follows;

Total Units account for (45,000) - Beginning Unit (15,000) = 30,000 EUP

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3 years ago