Question Managerial Accounting 1B

29 Jun Question Managerial Accounting 1B

Question
Managerial Accounting 1B

Financial and Managerial Accounting

Chapter 19

1.

Exercise 19-1 Income reporting under absorption costing and variable costing L.O. P2

Adams Company, a manufacturer of in-home decorative fountains, began operations on September 1 of the current year. Its cost and sales information for this year follows.

Production costs

Direct materials

$

40

per unit

Direct labor

$

60

per unit

Overhead costs for the year

Variable overhead

$

3,000,000

Fixed overhead

$

7,000,000

Nonproduction costs for the year

Variable selling and administrative

$

770,000

Fixed selling and administrative

$

4,250,000

Production and sales for the year

Units produced

100,000

units

Units sold

70,000

units

Sales price per unit

$

350

per unit

1.

Prepare an income statement for the company using absorption costing.(Input all amounts as positive values except net loss which should be indicated with a minus sign. Omit the “$” sign in your response.)

2.

Prepare an income statement for the company using variable costing.(Input all amounts as positive values except net loss which should be indicated with a minus sign. Omit the “$” sign in your response.)

3.

Under what circumstance(s) is reported income identical under both absorption costing and variable costing?

Exercise 19-4 Income reporting under absorption costing and variable costing L.O. P2

[The following information applies to the questions displayed below.]

Woodson Company, a producer of solid oak tables, reports the following data from its current year operations, which is its second year of business.

2.Exercise 19-4 Part 1

1.

Prepare the current year income statement for the company using absorption costing.(Input all amounts as positive values except net loss which should be indicated with a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

3.Exercise 19-4 Part 2

2.

Prepare the current year income statement for the company using variable costing.(Input all amounts as positive values except net loss which should be indicated with a minus sign. Leave no cells blank – be certain to enter “0” wherever required. Omit the “$” sign in your response.)

4.Exercise 19-6 Converting variable costing income to absorption costing income L.O. P2, P4

Lyon Furnaces prepares the income statement under variable costing for its managerial reports, and it prepares the income statement under absorption costing for external reporting. For its first month of operations, 375 furnaces were produced and 225 were sold; this left 150 furnaces in ending inventory. The income statement information under variable costing follows.

Sales (225 × $1,600)

$

360,000

Variable production cost (225 × $625)

140,625

Variable selling and administrative expenses (225 × $65)

14,625

Contribution margin

204,750

Fixed overhead cost

56,250

Fixed selling and administrative expense

75,000

Net income

$

73,500

1.

Prepare this company’s income statement for its first month of operations under absorption costing.(Input all amounts as positive values except net loss which should be indicated with a minus sign. Omit the “$” sign in your response.)

5.

Exercise 19-9 Contribution margin format income statement L.O. P3

Polarix is a retailer of ATVs (all terrain vehicles) and accessories. An income statement for its Consumer ATV Department for the current year follows. ATVs sell, on average, for $3,800. Variable selling expenses are $270 each. The remaining selling expenses are fixed. Administrative expenses are 40% variable and 60% fixed. The company does not manufacture its own ATVs; it purchases them from a supplier for $1,830 each.

POLARIX
Income Statement—Consumer ATV Department
For Year Ended December 21, 2011

Sales