Prepare the income statement for the year ended 31 December 2020 using: Absorption costing Variable costing
Prepare the income statement for the year ended 31 December 2020 using: Absorption costing Variable costing
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
Related questions
Question
Prepare the income statement for the year ended 31 December 2020 using:
- Absorption costing
- Variable costing
![Additional information regarding the costs of the company are given:
Manufacturing costs
Variable cost per unit
Budgeted fixed manufacturing overhead per year $32,400,000
$25
Selling and administrative costs
Variable cost per unit
Total fixed cost
$5
$5,000,000
Actual production in 2020
Actual Sales in 2020
7,600,000 units
7,000,000 units
$50 per unit
$32,000,000
Selling price
Actual fixed manufacturing overhead in 2020
The practical capacity level is used to calculate the budgeted fixed manufacturing cost
per unit. There are no variable cost variances. Fixed manufacturing overhead cost
variances are written off to cost of goods sold in the period in which they occur. There
has been no beginning inventory in 2020.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4247d9e3-eafc-4c2e-87a6-b9163bd1b6e8%2F99315dd9-0cdd-490d-a90a-5dc94dbb3583%2Fyb831q_processed.png&w=3840&q=75)
Transcribed Image Text:Additional information regarding the costs of the company are given:
Manufacturing costs
Variable cost per unit
Budgeted fixed manufacturing overhead per year $32,400,000
$25
Selling and administrative costs
Variable cost per unit
Total fixed cost
$5
$5,000,000
Actual production in 2020
Actual Sales in 2020
7,600,000 units
7,000,000 units
$50 per unit
$32,000,000
Selling price
Actual fixed manufacturing overhead in 2020
The practical capacity level is used to calculate the budgeted fixed manufacturing cost
per unit. There are no variable cost variances. Fixed manufacturing overhead cost
variances are written off to cost of goods sold in the period in which they occur. There
has been no beginning inventory in 2020.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
![Financial And Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337902663/9781337902663_smallCoverImage.jpg)
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337912020/9781337912020_smallCoverImage.jpg)
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
![Financial And Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781337902663/9781337902663_smallCoverImage.jpg)
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
![Survey of Accounting (Accounting I)](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning