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laiz [17]
3 years ago
6

Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year

follows: Whitman Company Income Statement Sales (35,000 units × $25 per unit) $ 875,000 Cost of goods sold (35,000 units × $16 per unit) 560,000 Gross margin 315,000 Selling and administrative expenses 280,000 Net operating income $ 35,000 The company’s selling and administrative expenses consist of $210,000 per year in fixed expenses and $2 per unit sold in variable expenses. The $16 unit product cost given above is computed as follows: Direct materials $ 5 Direct labor 6 Variable manufacturing overhead 1 Fixed manufacturing overhead ($160,000 ÷ 40,000 units) 4 Absorption costing unit product cost $ 16
Required: 1. Redo the company’s income statement in the contribution format using variable costing.
2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement above.
Business
1 answer:
puteri [66]3 years ago
7 0

Answer:

Net operating income $ 35,000 on  variable costing income statement

Net operating income $ 35,000 on absorption costing income statement

Explanation:

Whitman Company

Income Statement

Variable Costing

Sales (35,000 units × $25 per unit) $ 875,000

Variable Costs

Direct materials $ 5× 35,000 units $ 175,000

Direct labor $6× 35,000 units  $ 210,000

Variable manufacturing overhead $1× 35,000 units $ 35000

Variable selling and administrative expenses $ 2× 35,000 units $ 70,000

Total Variable Costs = $ 14 * 35000     $ 490,000

Contribution Margin                                $ 385,000  

Less

Fixed Overheads       $4 * 35,000= $ 140,000            

Fixed Selling and administrative expenses    $280,000- $70,000= $ 210,000

Net operating income $ 35,000

Whitman Company

Income Statement

Sales (35,000 units × $25 per unit) $ 875,000

Cost of goods sold (35,000 units × $16 per unit) 560,000

Gross margin 315,000

Selling and administrative expenses 280,000

Net operating income $ 35,000

The company’s selling and administrative expenses consist of $210,000 per year in fixed expenses and $2 per unit sold in variable expenses. The $16 unit product cost given above is computed as follows: Direct materials $ 5 Direct labor 6 Variable manufacturing overhead 1 Fixed manufacturing overhead ($160,000 ÷ 40,000 units) 4 Absorption costing unit product cost $ 16

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yanalaym [24]

Answer:

Long-term investments.

Explanation:

Capital budgeting can be regarded as process that is been utilized by business in determining the type proposed fixed asset purchases that need to be declined or should be accepted. This process helps in creating quantitative view as regards the proposed fixed asset investment, so that rational basis to make make a judgment can be surfaced. It should be noted that Capital budgeting is the process of analyzing Long-term investments.

6 0
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A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television
kotykmax [81]

Answer:

D. Economic value created.    

Explanation:

The reason is that the economic value created is the difference between the price the customer is willing to pay and the cost that the product actually costs to the firm.

Following is the formula for calculation of economic value created:

Economic Value Created = Value customer willing to pay   -  Cost of product

Here the television costs $400 to the firm and the customer is willing to pay $600 for the television. So by putting the values we have:

Economic Value Created = $600 - $400 = $200

So the correct option is option D.

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3 years ago
Select the best term to describe the following examples.
Bezzdna [24]

Answer:

The correct answer is: Emotional contagion.

Explanation:

The emotional state of an individual can be affected by the exposure to emotional expressions of others around which means that the emotional state can be transferred from one person to another even in online interactions through a process called emotional contagion.

Emotional contagion implies an individual connecting its emotions to others' moods which is likely to be reflected in both parties' behavior.

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Situation 1: There is a Head of Human Resource (HR) in a recognized Multinational National Company (MNC). You are a marketing ex
Phantasy [73]

Answer:

As a marketing executive of the company looking to beg an emergency leave from a HR person who is considered to be rudy, unfamiliar with me, 45+ age and also that the company is experiencing a lot of turnovers, the best way to approach the HR would be to:

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3 years ago
Pedregon Corporation has provided the following information: Cost per Unit Cost per Period Direct materials $ 6.95 Direct labor
Paraphin [41]

Answer:

The correct answer is $27,675.

Explanation:

According to the scenario, the given data are as follows:

Variable manufacturing OH = $1.75

Fixed manufacturing OH = $19,800

Units = 4,500 units

So, we can calculate the total amount of manufacturing overhead cost by using following formula:

Total manufacturing OH = Total variable OH + Total fixed OH

Where, Total variable OH = $1.75 × 4,500 = $7,875

By putting the value, we get

Total Manufacturing OH = $7,875 + $19,800

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