It is the end of 2020. Countrywide All - Fixed Corporation began operations in January 2019....
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It is the end of 2020. Countrywide All - Fixed Corporation began operations in January 2019. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output. Countrywide All - Fixed Corp. is located on the bank of a river and has its own hydroelectric plant to supply power, light, and heat. The company manufactures a synthetic fertilizer from air and river water and sells its product at a price that is not expected to change. It has a small staff of employees, all paid fixed annual salaries. The output of the plant can be increased or decreased by pressing a few buttons on a keyboard. The following budgeted and actual data are for the operations of Countrywide All - Fixed. (Click the icon to view the budgeted and actual data.) Read the requirements. - X Data Table X Requirements Requirement 1. Prepare loss.) The company uses budgeted production as the denominator level and writes off any production-volume variance to cost of goods sold. 1. Prepare income statements with one column for 2019, one column for 2020, and one column for the 2 years together using (a) variable costing and (b) absorption costing. 2020" Start by preparing the (a) 2. What is the breakeven point under (a) variable costing and (b) absorption costing? Sales 2019 44,000 tons 88,000 tons S74 per ton 44,000 tons 0 tons 3. What inventory costs would be carried in the balance sheet on December 31, 2019 and 2020, under each method? Production Revenue Selling price $74 per ton Fixed costs: 4. Assume that the performance of the top manager of Countrywide All - Fixed is evaluated and rewarded largely on the basis of reported operating income. Which costing method would the manager prefer? Why? Costs (all fixed): Manufacturing costs Manufacturing $2,200,000 Operating costs Total fixed costs $2,200,000 $94,000 Operating (nonmanufacturing) $94,000 Print Done Operating income (loss). * Management adopted the policy, effective January 1, 2020, of producing only as much product as needed to fill sales orders. During 2020, sales were the same as for 2019 and were filled entirely from inventory at the start of 2020. Print Done It is the end of 2020. Countrywide All - Fixed Corporation began operations in January 2019. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output. Countrywide All - Fixed Corp. is located on the bank of a river and has its own hydroelectric plant to supply power, light, and heat. The company manufactures a synthetic fertilizer from air and river water and sells its product at a price that is not expected to change. It has a small staff of employees, all paid fixed annual salaries. The output of the plant can be increased or decreased by pressing a few buttons on a keyboard. The following budgeted and actual data are for the operations of Countrywide All - Fixed. (Click the icon to view the budgeted and actual data.) Read the requirements. - X Data Table X Requirements Requirement 1. Prepare loss.) The company uses budgeted production as the denominator level and writes off any production-volume variance to cost of goods sold. 1. Prepare income statements with one column for 2019, one column for 2020, and one column for the 2 years together using (a) variable costing and (b) absorption costing. 2020" Start by preparing the (a) 2. What is the breakeven point under (a) variable costing and (b) absorption costing? Sales 2019 44,000 tons 88,000 tons S74 per ton 44,000 tons 0 tons 3. What inventory costs would be carried in the balance sheet on December 31, 2019 and 2020, under each method? Production Revenue Selling price $74 per ton Fixed costs: 4. Assume that the performance of the top manager of Countrywide All - Fixed is evaluated and rewarded largely on the basis of reported operating income. Which costing method would the manager prefer? Why? Costs (all fixed): Manufacturing costs Manufacturing $2,200,000 Operating costs Total fixed costs $2,200,000 $94,000 Operating (nonmanufacturing) $94,000 Print Done Operating income (loss). * Management adopted the policy, effective January 1, 2020, of producing only as much product as needed to fill sales orders. During 2020, sales were the same as for 2019 and were filled entirely from inventory at the start of 2020. Print Done
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