Assume that the required rate of return for each company is 12%. Calculate the residual income for
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- Assume that the required rate of return for each company is 12%. Calculate the residual income for each company.
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ents; sting The following information pertains to Lextel, Inc., for 2008: Beginning inventory in units Units produced Units sold Ending inventory in units Variable costs per unit: Direct materials Direct labor Variable overhead Variable selling expenses Fixed costs per year: Fixed overhead Fixed selling and administrative $ 25,000 23,000 2,000 8.00 3.00 1.80 4.00 $107,500 26,800 Ind There are no work-in-process inventories. Normal activity is 25,000 units. Expected and actual overhead costs are the same. Required 1. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income. 2. Assume the selling price per unit is $26. Prepare an income statement (a) using variable costing and (b) using absorption costing. ents; sting The following information pertains to Lextel, Inc., for 2008: Beginning inventory in units Units produced Units sold Ending inventory in units Variable costs per unit: Direct materials Direct labor Variable overhead Variable selling expenses Fixed costs per year: Fixed overhead Fixed selling and administrative $ 25,000 23,000 2,000 8.00 3.00 1.80 4.00 $107,500 26,800 Ind There are no work-in-process inventories. Normal activity is 25,000 units. Expected and actual overhead costs are the same. Required 1. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income. 2. Assume the selling price per unit is $26. Prepare an income statement (a) using variable costing and (b) using absorption costing.
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Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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