Griswold Company began operations in 2013.The company manufacturers a professionaI-grade vacuum cleaner and can make up to 18,090 units each year. Actual data for 2013 are given as follows:

1. Prepare a 2013 income statement for Griswold Company using variable costing.

2. Prepare a 2013 income statement for Griswold Company using absorption costing.

3. Explain the differences in operating incomes obtained in requirement 1 and requirement 2.

4. Griswold?s management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this create for the supervisors? What modifications could Griswold management make to improve such a plan? Explain briefly.

Transcribed Image Text:

215 1 2 3 4 5 678 a Home Insert Units produced Units sold Selling price Variable costs: 9 10 Fixed costs: 11 12 13 A Manufacturing cost per unit produced Direct materials Direct manufacturing labor Manufacturing overhead Marketing cost per unit sold Page Layout Manufacturing cost Administrative cost Marketing Formulas $ Data B 18,000 17,500 425 30 25 60 45 1,080,000 965,450 1,366,400 215 1 2 3 4 5 678 a Home Insert Units produced Units sold Selling price Variable costs: 9 10 Fixed costs: 11 12 13 A Manufacturing cost per unit produced Direct materials Direct manufacturing labor Manufacturing overhead Marketing cost per unit sold Page Layout Manufacturing cost Administrative cost Marketing Formulas $ Data B 18,000 17,500 425 30 25 60 45 1,080,000 965,450 1,366,400

Answer rating: 100% (QA)

1 Sales Number of goods sold Selling price 17500 425 7437500 Direct materials 17500 30 525000 Direct ... View the full answer