Rogers sells shoes at $25 per pair. The following data are related to its 2022 operation: Items Year 2022 Sales 95,000 unit Beginning inventory 20,000 unit Production 85,500 unit Ending inventory 10,500 unit Variable manufacturing cost per unit $20 Fixed manufacturing overhead costs $2,000,000 per year Denominator machine hours 1800 Standard production rate 50 units per machine hour Variable operating expenses $5 per unit Fixed selling and administration expenses $100,000 per year Assumption: The standard cost per unit is same for units in beginning and unit produced during the year and no price, spending or efficiency variance. 10 Required: a. Prepare income statements for year 2022 using absorption costing. b. Prepare income statements for year 2022 using variable costing. c. Explain why the income was different each year using the two methods. d. Explain why absorption costing has potential for leading to undesirable incentives for managers

Rogers sells shoes at $25 per pair. The following data are related to its 2022 operation: Items Year 2022 Sales 95,000 unit Beginning inventory 20,000 unit Production 85,500 unit Ending inventory 10,500 unit Variable manufacturing cost per unit $20 Fixed manufacturing overhead costs $2,000,000 per year Denominator machine hours 1800 Standard production rate 50 units per machine hour Variable operating expenses $5 per unit Fixed selling and administration expenses $100,000 per year Assumption: The standard cost per unit is same for units in beginning and unit produced during the year and no price, spending or efficiency variance. 10 Required: a. Prepare income statements for year 2022 using absorption costing. b. Prepare income statements for year 2022 using variable costing. c. Explain why the income was different each year using the two methods. d. Explain why absorption costing has potential for leading to undesirable incentives for managers

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter20: Inventory Management: Economic Order Quantity, Jit, And The Theory Of Constraints

Section: Chapter Questions

Problem 7E: Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The...

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Starling Co. manufactures one product with a selling price of 18 and variable cost of 12. Starlings total annual fixed costs are 38,400. If operating income last year was 28,800, what was the number of units Starling sold? a. 4,800 b. 6,400 c. 5,600 d. 11,200
Ottis, Inc., uses 640,000 plastic housing units each year in its production of paper shredders. The cost of placing an order is 30. The cost of holding one unit of inventory for one year is 15.00. Currently, Ottis places 160 orders of 4,000 plastic housing units per year. Required: 1. Compute the economic order quantity. 2. Compute the ordering, carrying, and total costs for the EOQ. 3. How much money does using the EOQ policy save the company over the policy of purchasing 4,000 plastic housing units per order?
Super Bike Manufacturing Company presents the following data for year 2022: Opening inventory: 0 Units Sales: 8,000 Units Production: 10,000 Units • Closing inventory: 2,000 Units Direct materials: $240 • Direct labor: $280 • Variable manufacturing overhead expenses: $100 • Variable selling and administrative expenses: $40 • Fixed manufacturing overhead expenses: $1200,000 • Fixed selling and administrative expenses: $800,000 Required: Using the data given above, compute the unit product cost of one bike under: 1. absorption costing system. 2. variable costing system.
Accounting Addidas sells shoes at $55 per pair. The following data are related to its 2022 operation: Items Year 2022 Sales 95,000 unit Beginning inventory 20,000 unit Production 85,500 unit Ending inventory 10,500 unit Variable manufacturing cost per unit $20 Fixed manufacturing overhead costs $2,000,000 per year Denominator machine hours 1800 Standard production rate 50 units per machine hour Variable operating expenses $5 per unit Fixed selling and administration expenses $100,000 per year Assumption: The standard cost per unit is same for units in beginning and unit produced during the year and no price, spending or efficiency variance. Required:a. Prepare income statements for year 2022 using absorption costing.b. Prepare income statements for year 2022 using variable costing.c. Explain why the income was different each year using the two methods.d. Explain why absorption costing has potential for leading to undesirable incentives for managers. Please answer all parts i cant post…
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales Information for this year follows. Manufacturing costs Direct materials 24 24 30 per unit 50 per unit Direct labor Overhead costs 20 per unit $8,800, 000 (per year) variable 24 Fixed selling and administrative costs for the year variable $ 750,000 $4,500,000 Fixed Production and sales for the year Units produced 110,000 units 80, 000 units 360 per unit Units sold Sales price per unit 1. Prepare an Income statement for the year using varlable costing. 2. Prepare an Income statement for the year using absorption costing. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the year using variable costing. SIMS COMPANY Variable Costing Income Statement
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials 35 per unit 55 per unit Direct labor Overhead costs Variable 20 per unit (per year) $ Fixed $8,400,000 Selling and administrative costs for the year $ 750,000 $4,500,000 Variable Fixed Production and sales for the year Units produced 105,000 units 75,000 units 360 per unit Units sold Sales price per unit $ 1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare an income statement for the year using absorption costing. SIMS COMPANY Absorption Costing Income Statement %24
Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales information for this year follows. Manufacturing costs Direct materials. Direct labor 30 per unit $ 50 per unit Overhead costs Variable $ 40 per unit Fixed $6,600,000 (per year) Selling and administrative costs for the year Variable $ 775,000 $5,000,000 Fixed Production and sales for the year Units produced 110,000 units Units sold Sales price per unit 80,000 units 360 per unit $ 1. Prepare an income statement for the year using variable costing. 2. Prepare an income statement for the year using absorption costing. Complete this question by entering your answers in the tabs below. Required 1 Required 2 O F9 F10 Ś F11 F12 my wor Fn 3:30 PM 6/16/2022 Insert Drt Sc
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Greek Manufacturing Company produces and sells a line of product that are sold usually company has a maximum production capacity of 100,000 units per year. Operating at normal capacity, the business earned Operating Income of $600,000 in 2020. The following cost data has been prepared for the year year round. The ended December 31, 2020. Selling price per unit. $50.00 Production Costs: Direct Materials $10.00 Direct Labour $8.00 Variable Manufacturing Overhead $7.00 Fixed Manufacturing Overhead.. . $450,000 Fixed Selling & Administrative Expenses... $300,000 Variable selling expense per unit $10.00 g) Greek's management team is concerned about the selling expenses associated with the product and wants to reduce the variable selling expense per unit by 30%, which will see a simultaneous reduction in the total fixed selling expenses by $30,000. If they are able to accomplish this feat, it is expected that sales volume for the year will fall by 16%% below normal capacity. What must the…
Royal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban GreengrowSelling price per unit $ 9.00 $ 33.00Variable expenses per unit $ 2.50 $ 12.00Traceable fixed expenses per year $ 136,000 $ 41,000 Common fixed expenses in the company total $110,000 annually. Last year the company produced and sold 37,000 units of Weedban and 19,500 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines.
The following information applies to the questions displayed below.]Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2018 2019 Sales ($46 per unit) $ 920,000 $ 1,840,000 Cost of goods sold ($31 per unit) 620,000 1,240,000 Gross margin 300,000 600,000 Selling and administrative expenses 290,000 340,000 Net income $ 10,000 $ 260,000 Additional Information Sales and production data for these first two years follow. 2018 2019 Units produced 30,000 30,000 Units sold 20,000 40,000 Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following. Direct materials $ 5 Direct labor 9 Variable overhead 7 Fixed overhead ($300,000/30,000 units) 10 Total product cost per unit $ 31 Selling…