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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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Brian is a truck driver who delivers products throughout Massachusetts. His friend Chris is a traffic planner for the same state
DiKsa [7]

Answer:

Assuming that you can only choose one answer, the most suitable one would be (A) Chris designs models to make traffic flow better, which enables Brian to get to his company’s warehouse faster.

Explanation:

This answer is correct because Chris is a traffic planner – thus he merely designs the traffic flow, he does not create it, thus making answer (D) incorrect. Though (B) is true, it doesn’t relate to Chris’ career, making it false as well. As for (C), the answer is not correct because Chris doesn’t design the maps of the state, he only designs the traffic flow.

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In a new margin account, a customer buys 300 shares of ABC at $40 per share, 100 shares of the Ajax Mutual Fund at $24, and 10 P
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Answer: 12400

Explanation:

It should be noted that 50% of the stick value will be paid by the customer and also 100% of the mutual fund shares value will also be paid because they are nonmarginable securities.

Therefore, 50% of $12,000 = $6,000

Total payment required will now be:

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3 0
3 years ago
MFG Company experiences the following cost behavior patterns each week: Fixed costs: supervisor’s salary $3,000; factory rent $6
s2008m [1.1K]

Answer:

Total cost= $204,750

Explanation:

Giving the following information:

Fixed costs: supervisor’s salary $3,000; factory rent $6,500

Mixed costs: utilities $3,500 + $10.25 per unit

Variable costs per unit:

manufacturing labor wages $30.00

supplies used in production $13.50

packaging cost $7.25

warranty cost $4

Required: Compute total costs to be incurred for a week with 2,950 units of activity.

Fixed costs= 3,000 + 6,500 + 3,500= $13,000

Variable costs= (10.25 + 30 + 13.5 + 7.25 + 4)*2,950= $191,750

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4 0
3 years ago
The current risk-free rate of return in the economy is 1.5%. In addition, the market rate of return is currently 6%. Given that
ludmilkaskok [199]

Answer:

The company’s systemic risk level (beta coefficient) is 2.44%

Explanation:

According to Capm Expected Return of Stock = Risk Free Rate + Beta*(Market Return - Risk Free Rate)

Beta = (Expected Return of Stock - Risk freed Rate)/(Market return -Risk free Rate)

        = (12.5% - 1.5%)/(6% - 1.5%)

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Therefore, The company’s systemic risk level (beta coefficient) is 2.44%

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