1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Anuta_ua [19.1K]
3 years ago
13

Prepare income statements based on variable costing for each of the 2 years. 2.Prepare income statements based on absorption cos

ting for each of the 2 years. 3.Prepare a numerical reconciliation and explanation of the difference between operating income for each year under absorption costing and variable costing. 4.Critics have claimed that a widely used accounting system has led to undesirable buildups of inventory levels. (a) Is variable costing or absorption costing more likely to lead to such buildups? Why? (b) What can be done to counteract undesirable inventory buildups?
Business
1 answer:
enot [183]3 years ago
3 0

Answer:

The question is incomplete, it is missing the accounts and numbers, so I looked for a similar question:

<em>The Rehe Comany sells its razors at $3 per unit. The company uses a first-in, first-out actual costing system. A fixed manufacturing cost rate is computed at the end of each year by dividing the actual fixed manufacturing costs by the actual production units. The following data are related to its first two years of operation: </em>

<em>                    2011 2012 </em>

<em>Sales 1000 units  1200 units </em>

<em>Costs: </em>

<em>Variable manufacturing  700 500</em>

<em>Fixed manufacturing  700 700</em>

<em>Variable operating (marketing) 1000 1200 </em>

<em>Fixed operating (marketing)  400 400</em>

<em />

                                                           2011                  2012

Sales                                               1000 units         1200 units

Production                                          1400                  1000  

Costs:  

Variable manufacturing                      $700               $500

per unit $0.50

Fixed manufacturing                           $700               $700

Variable operating (marketing)         $1000             $1200

Fixed operating (marketing)               $400               $400

cogs under absorption costing 2011 = ($1,400 / 1,400) x 1,000 = $1,000

cogs under absorption costing 2012 = $400 + ($1,200 / 1,000) x 800 = $1,360

1.                                    INCOME STATEMENTS

                                      VARIABLE COSTING

                                                             2011                    2012

Total sales revenue:                        $3,000                $3,600            

Opening inventory:                               ($0)                 ($200)

Variable manufacturing:                   ($700)                 ($500)

<u>Ending inventory:                               $200                   $100 </u>

Gross contribution margin:             $2,500               $3,000

<u>Variable operating:                         ($1,000)              ($1,200)</u>  <u> </u>

Contribution margin:                        $1,500                $1,800  

Fixed manufacturing:                         ($700)                ($700)

<u>Fixed operating:                                ($400)                ($400) </u>

Net operating income:                       $400                  $700

2.                                   INCOME STATEMENTS

                                   ABSORPTION COSTING

                                                             2011                    2012

Total sales revenue:                        $3,000                $3,600            

<u>COGS:                                             ($1,000)                ($1,360) </u>

Gross margin:                                  $2,000                $2,240

<u>Operating costs:                             ($1,400)               ($1,600) </u>

Net operating income:                       $600                   $640

3. Under variable costing, closing inventory = 400 units x $0.50 (variable production costs per unit) = $200.

Under absorption costing, closing inventory = 400 units x $1 (production cost per unit) = $400

Since closing inventory is $200 higher under absorption costing, then net operating income during 2011 increases by $200.

4. a) Variable costing is more likely to result in inventory buildups. Since variable costing determines the value of closing inventory only using variable manufacturing costs, their value is much lower. E.g. in this case the value of closing inventory 2011 under variable costing is $200, while under absorption costing it is $400. This means that less costs are transferred from one year to another.

b) Cost of goods sold must include all production costs (both variable and fixed). This way COGS costs cannot be over estimated during one year and under estimated the next.

<em> </em>

<em />

You might be interested in
Oregon Co.'s employees are eligible for retirement with benefits at the end of the year in which both age 60 is attained and the
-BARSIC- [3]

Answer:

$205,592

Explanation:

Interest cost is the Present Value of this $ 20,000 annuity streams at time zero i.e. ( Year 2022

Value of annuity stream = $ 20,000 x 11.11839

Present Value of annuity streams at 2015 =$ 222,367.80

Discount Factor for 2017 = (1.04)-2 = 0.92456

Present Value at 2022= $ 222,367.80 x 0.92456

Service Cost= $ 205,592

5 0
3 years ago
Most consumers wouldn’t drive very far to buy a pack of gum since it’s a lost-cost item that is often bought on impulse. Therefo
julia-pushkina [17]

Answer:

The correct answer to the following question is distributing the product intensively.

Explanation:

An item like gum which can be said to be lost cost item , should be distributed intensively , so that this product is always readily available to the consumers . For a product like this, people are not going put so much effort in to it ( like driving long way ), to buy this product which consumers often buy on the impulse. Consumers don't plan long ahead to buy a pack of gum , they just do it when they feel like they want to chew a gum , so its important that product like this should be intensively in the market.

4 0
3 years ago
A publisher reports that 55% of their readers own a particular make of car. a marketing executive wants to test the claim that t
Dominik [7]

Based on the percentage of readers who own a particular make of the car and the random sample, we can infer that there is sufficient evidence at a 0.02 level to support the executive claim.

<h3>What is the evidence to support the executive's claim?</h3>

The hypothesis is:

Null hypothesis : P = 0.55

Alternate hypothesis : P ≠ 0.55

We then need to find the test statistic:

= (Probability found by marketing executive - Probability from publisher) / √( (Probability from publisher x (1 - Probability from publisher))/ number of people sampled

= (0.46 - 0.55) / √(( 0.55 x ( 1 - 0.55)) / 200

= -2.56

Using this z value as the test statistic, perform a two-tailed test to show:

= P( Z < -2.56) + P(Z > 2.56)

= 0.0052 + 0.0052

= 0.0104

The p-value is 0.0104 which is less than the significance level of 0.02. This means that we reject the null hypothesis.

The Marketing executive was correct.

Find out more on the null and alternate hypothesis at brainly.com/question/25263462

#SPJ1

8 0
2 years ago
On the day before his presentation, Jamie was advised to.
stellarik [79]

Answer:

Go to the room beforehand and figure out what technology he needed to bring.

Explanation:

In bussiness presentation you wont always expect your client to provide you with the technology needed to give the presentation. It is best for you to ask and then come prepared rather than go empty handed.

5 0
3 years ago
Suppose the price of Twinkies decreases from $1.45 to $1.25 and, as a result, the quantity of Twinkies demanded increases from 2
valentinak56 [21]
It’s b 1.55
And plus it increases too
5 0
2 years ago
Read 2 more answers
Other questions:
  • In unit pricing, the total value of the contract is a function of the quantities needed to complete the work.
    15·1 answer
  • Out of 150 math students, 86% passed. how many students passed math class?
    6·2 answers
  • What is the information that helps managers determine how to do better than others?
    14·1 answer
  • Prepare an adjusted trial balance as of December 31. (Enter your answers in thousands of dollars.) MINT CLEANING INC. Adjusted T
    7·1 answer
  • Cloverdale, Inc., uses the conventional retail inventory method to account for inventory. The following information relates to c
    13·1 answer
  • Congratulations! Your portfolio returned 17.5​% last​ year, 2.2​% better than the market return of 15.3​%. Your portfolio had a
    12·1 answer
  • Well organized buisiness writing uses short sentences and paragraphs. True or False?
    8·1 answer
  • Sustainability programs often find their success beyond company boundaries, thus ______ systems and _____ metrics cannot capture
    6·1 answer
  • In the decision-making process, you must take into account several cultural variables. Describe one of the variables associated
    10·1 answer
  • True or False?
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!