Posted: February 8th, 2019

Variable and Absorption costing and Income Statements

Get research paper samples and course-specific study resources under   homework for you course hero writing service – Manage rial AccountingProblem 1Variable and Absorption costing and Income StatementsWe manufacture and sell Dinner Tables.Manufacturing costs:Fixed overheadVariable overheadDirect laborDirect materials$300,000$5 per table$10 per table$20 per tableBeginning inventoryTables producedTables Sold0 Tables100,00095,000Selling and administrative costs:FixedVariableThe table sells for$500,000$15 Per table sold$100The company uses absorption costing, calculate the manufacturing cost per unit.Absorption Manufacturing Costs Per TablePrepare an absorption costing income statement.Tables R USIncome StatementFor the Month Ended July 31, 20XXAbsorption CostingSalesThe company uses variable costing, calculate the manufacturing cost per unit.Variable Manufacturing Costs Per TablePrepare an variable costing income statement.Tables R USIncome StatementFor the Month Ended July 31, 20XXVariable CostingSalesNet incomeProblem 2Use the following data:Activity Cost PoolPurchasingReceivingAssemblingTestingFinishingPacking and shippingEstimatedOverhead$60,00040,000200,00050,000100,00070,000$520,000Number of UnitsCurlersExpectedUse ofDrivers2007005,0002,00070,0002,000DryersExpectedUse ofDriversTotal Activity300500 Orders9001,600 Pounds15,00020,000 Number of Parts3,0005,000 Number of Tests30,000100,000 D. L. Hours5,0007,000 Cartons50,00040,000Part 1 – Plantwide MOH and Unit costA. Based on the estimated 100,000 direct labor hours and the estimated MOH of $520,000, what would theplantwide application rate be per direct labor hour?B. Get a cost PER UNIT for the Curler and Dryer.Apply MOH based on your application rate above, and assume it takes 1 Direct Labor hourfor the Curler, and 2 Direct Labor hours for the Dryer.ProductsManufacturing CostsDirect Materials per unitDirect Labor per unitMOH per unitTotal Unit CostCurler$5.00$8.00Dryer$9.00$16.00Part 2 – Activity based MOH and Unit CostA. Determine the MOH rate per unit for the Curler and DryerActivity Cost PoolPurchasingReceivingAssemblingTestingFinishingPacking and shippingActivity Cost PoolEstimatedOverhead÷÷÷÷÷÷÷ExpectedUse ofDriversExpected Use of Driversin totalOrdersPoundsNumber of PartsNumber of TestsD.L. hoursCartonsActivity-BasedOverhead Rate=======OrdersPoundsNumber of PartsNumber of TestsD. L. HoursCartonsCurlerDryerActivityBasedOverheadRatesActivityBasedOverheadRatesExpectedUse ofDriversCostAssignedPurchasingReceivingAssemblingTestingFinishingPacking and shippingTotal costs assignedUnits producedOverhead cost per unitB. Get a cost PER UNIT for the Curler and Dryer.ProductsManufacturing CostsDirect Materials per unitDirect Labor per unitMOH per unitTotal Unit CostCurler$5.00$8.00Dryer$9.00$16.00CostAssignedProblem 3Use the following data:Produced & SoldVariable expense per unitSelling price per unitBlendersCoffee Makers50,00020,000 units$10$20$18$50Fixed costs = $120,000 of which $40,000 can be avoided if the blenders are not producedand $50,000 avoided if the coffee makers are not produced.1. Prepare segmented Income statement separating direct and common fixed costsBlendersSalesLess: Variable cost of goods soldContribution marginLess: Direct fixed expensesSegment marginLess: Common fixed expensesOperating incomeCoffee MakersTotal