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Katen [24]
3 years ago
14

Manta Ray Company manufactures diving masks with a variable cost of $25. The masks sell for $34. Budgeted fixed manufacturing ov

erhead for the most recent year was $792,000. Actual production was equal to planned production.
Required: Under each of the following conditions, state (a) whether operating income is higher under variable or absorption costing and (b) the amount of the difference in reported operating income under the two methods. Treat each condition as an independent case.
1. Production ............................................... 110,000 units
Sales ........................................................ 108,000 units
2. Production ............................................... 90,000 units
Sales ........................................................ 95,000 units
3. Production ............................................... 79,200 units
Sales ........................................................ 79,200 units
Business
1 answer:
Nonamiya [84]3 years ago
6 0

Answer:

(First Case) Absorption cost income is higher by 14,200 dollars

(Second Case) variable costing income is higher by 44,000 dollars

(Third Case) they are equal as produciton = sales

Explanation:

the difference arises when production differs with sales.

that's because variable will consider the entire amount of fixed cost as cost of the period while, absorption will capitalizethe fixed cost through inventory. If production matches sales then in both cases the fixed cost are entire expressed in the income statement. If they don't the difference is the difference times unit fixed cost.

(First Case)

fixed cost per unit $792,000 / 110,000 = $7.2

difference (110,000 - 108,000) x $7.2 = $14,200

(Second Case)

fixed cost per unit: 792,000 / 110,000 = $8.8

difference (90,000 - 95,000) x $8.8 = $44,000

(Third Case)

They match thus, no difference arises.

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stealth61 [152]

Answer:

C. Joint Venture

Explanation:

A Joint Venture is a business agreement in which two or more parties agree to combine their resources in order to achieve an objective.

Companies use Joint Ventures to partner with foreign businesses in order to enter their market. This is what China is proposing in the scenario above, and it has been done in order that China might have a stake in those businesses.

<u>Advantages of a Joint Venture include:</u>

  • Access to new markets.
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  • Low cost of production.
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7 0
3 years ago
Cow’s Milk Creamery, Inc., needs a certain part for its pasteurizing equipment to continue its operations and orders one for $3,
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D.) I think I hope I helped
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3 years ago
Identify how changes within an organization affect the OM strategy for a company. For​ instance, discuss what impact the followi
Ierofanga [76]

Answer:

a. Maturing of a product

When the product reaches its maturity stage, its sales volume reduces considerably. This would require different marketing strategies like product enhancement, price changing or developing new designs, etc.

b. Technology innovation in the manufacturing process

This will cause many changes in the strategy as technological innovation would reduce manual labor cost. Also, the organization would need skilled employees to deal with the new technology.

- Cost cutting is instituted.

- Product changes decrease.

- Design compromises are instituted.

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6 0
3 years ago
Family Furniture Corporation incurred the following costs. Identify the costs as variable, fixed, or mixed. 1. Wood used in the
Paraphin [41]

Answer:

Explanation:

1. Wood used in the production of furniture is a variable cost

2. Fuel used in delivery trucks is  variable cost

3. Straight Line depreciation on factory building is a Fixed cost

4. Screws used in production is a Variable cost

5. Sales staff Salaries is a Fixed cost

6.Sales commissions Variable

7.Property taxes Fixed

8. Insurance on buildings Fixed

9. Hourly wages of Furniture is Variable

10. Salaries of factory supervisrors is Fixed cost

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8 0
2 years ago
Debbie, a popular wedding photographer, is able to photograph a wedding every Saturday of the year. She charges couples $4,000 f
rosijanka [135]

Answer:

c. $1,800

Explanation:

Economic cost calculates what is gained or lost when a particular activity is chosen over another activity.

It incorporates the opportunity cost of taking a particular activity into its calculation of cost.

The economic cost of Debbie taking the picture of her niece is :

$4000 - $2200 = $1800

I hope my answer helps you

6 0
3 years ago
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