Due to the great importance that administrative accounting has gained, the general director of the company has
Question:
Due to the great importance that administrative accounting has gained, the general director of the company has become convinced of the advantages of direct costing in decision making. He then offers an expert the company's latest income statement, as well as additional information, and requests his help in changing the costing method and explaining the difference between 2009 profits.
Income statement for the year 2009
Sales (28,000 units) $336,000
Sales cost:
Beginning inventory (9,300 at $7) $65,100
Production cost (25,900 to $7) 181,300
Merchandise available for sale 246,400
Final inventory (50,400) 196,000
Gross profit 140,000
Variable administrative expenses 14,000
Fixed administration expenses 44,000 58,000
Operating income $82,000
Additional information: The fixed manufacturing expense rate is $4. Current production is equal to the company's normal capacity.
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr