bevonulostus bsxit silla 150 cd 916 212000 Joan Hill, President of Hill & Hill Pens, was...
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bevonulostus bsxit silla 150 cd 916 212000 Joan Hill, President of Hill & Hill Pens, was looking forward to receiving the company's second quarter income statement. She knew that the sales budget of 20,000 units sold had been met82 during the second quarter and that this was an increase of 25% over the first quarter sales units. She was happy about the increase in sales, since Hill & Hill Pens was about to approach its bank for additional loan money for expansion purposes. She anticipated the strong second-quarter T results would be a real plus in persuading the bank to extend the additional credit. visainimbs For this reason, Joan was shocked when she saw the first two quarters income statement below. Instead of increasing operating income, there was a decrease.no) J209 oldsins & Hill & Hill Pens (0+ row) (0OS dho Income Statements mooni grilansqo or yw nislqxa For the First Two Quarters 02 Second Quarter 3 First Quarter dr Sales -COGS Beg Inv COGM -End Inv $1,600,000 $210,000 1,400,000 490,000 980,000 <490,000> +/- Adi for PVV 0 _240,000 < 70,000> $2,000,000 = Gross margin -Selling & Admin Variable Fixed Operating Income 240. 1,120,000 $ 480,000 80,000 230,000 $170,000 1,640,000 $ 360,000 100,000 230,000 $ 30,000 Joan was certain there had to be an error somewhere and immediately called the controller into her office to find the problem. The controller stated, "The operating income is correct, Joan. Sales went up during the second quarter, but the problem is in production. You see, we budgeted to produce 20,000 units each quarter, but a strike in one of our supplier's plants forced us to cut production back to only 14,000 units in the second quarter. That's what caused the drop in operating income." Joan replied, "I don't understand this! I know sales increased, yet you talk about production to explain the drop in income! What does this have to do with the sales that we made? If sales go up, then income ought to go up." Budgeted production and sales for the year, along with actual production and sales for the first two quarters are given below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Planned (budgeted) sales Actual sales 16,000 20,000 20,000 24,000 16,000 20,000 -> Planned (budgeted) production 20,000 20,000 20,000 20,000 Actual production 20,000 14,000 guz sldning av gahan noilgozdno zool-gitoval The company's plant is heavily automated, so fixed manufacturing overhead costs total $800,000 per quarter. Variable manufacturing costs are $30 per unit. The fixed manufacturing overhead cost is applied to units at the rate of $40 per unit (based on the budgeted production shown above $800,000/20,000 units = $40 per unit). Any Production Volume Variance is closed directly to COGS for the quarter. od ovo == Xmed at doors of mods as a to sew air tert bos 19hup brosa od grub lilli sonizzola ni 92891ni di tuods vqqsil asw e2 The company had 3,000 units in inventory at the start of the first quarter. Variable selling and 101 administrative expenses are $5 per unit. tx of land or gnibusq ni zulq last od blow atluast B Required:omolup owl it or waz dla odw boxborla asw sol noah air 10 1. Prepare a variable cost (contribution format) income statement for the first two quarters.nl (worth 40%) ano Ili 2 IH 2. Explain why the operating incomes are different. (worth 20%) 21stisu owT teri odt 10 3. Explain why the first quarter has a $ 0 Production Volume Variance (PVV) and the second quarter has a $240,000 PVV. Why is the $240,000 PVV added to COGS? (worth 20%) val 958 000.00+ 000.080 000.01$ 2 2000- 4. Given that you may need to consult with owners of small-sized business in the future, what are some of the advantages and disadvantages of preparing a variable costing method income statement for them? (worth 20%) VV 101 DA 000,00 000.08A 2 1916 22010 = nimbA & guills2- oldsins V 000.001 000.0ES 000.0E & 000.08 000.08 000.0V12 boxi amoon! gnit ciollos srit balina vlausibemmi bas 919dw02 1019 s od or bad short mistico asw sol ol 100109 21 smoomi gnilmoqo sd T" batsiz 19lloutno od moldong sdt brit of offto od botagbud av 992 woY noitoubong ni ai moldoni judashup boose or gnhub qu know ? Juo bi zu bootol ainslq 2 oilqque quo to ono ni ruta s jud otsup dose atinu 000.0 01 bor qob or bound a ted up bolt ni atinu 000. ylno of load motobog "moni gril oi nontonboiq juods list woy toy,beasomoni olsa wond 1 leirit bastarobnu 'nob I boilqen neol og asta 11 Sobem w tort 29102 rb diw ob of overl air) 200b jariW !omooni ni qob or mislqxe qu og of Jdquo moniqu Jenit odt not asla bns noiloubouq lsujos diw gnols.169y sri 101 olsa bas noitouboiq betegbu woled revig 9 1ahsuQ 000.1 000,0 &000,0 000.01 aslea (bolagbud) bonnett 000.0$ 000.al bevonulostus bsxit silla 150 cd 916 212000 Joan Hill, President of Hill & Hill Pens, was looking forward to receiving the company's second quarter income statement. She knew that the sales budget of 20,000 units sold had been met82 during the second quarter and that this was an increase of 25% over the first quarter sales units. She was happy about the increase in sales, since Hill & Hill Pens was about to approach its bank for additional loan money for expansion purposes. She anticipated the strong second-quarter T results would be a real plus in persuading the bank to extend the additional credit. visainimbs For this reason, Joan was shocked when she saw the first two quarters income statement below. Instead of increasing operating income, there was a decrease.no) J209 oldsins & Hill & Hill Pens (0+ row) (0OS dho Income Statements mooni grilansqo or yw nislqxa For the First Two Quarters 02 Second Quarter 3 First Quarter dr Sales -COGS Beg Inv COGM -End Inv $1,600,000 $210,000 1,400,000 490,000 980,000 <490,000> +/- Adi for PVV 0 _240,000 < 70,000> $2,000,000 = Gross margin -Selling & Admin Variable Fixed Operating Income 240. 1,120,000 $ 480,000 80,000 230,000 $170,000 1,640,000 $ 360,000 100,000 230,000 $ 30,000 Joan was certain there had to be an error somewhere and immediately called the controller into her office to find the problem. The controller stated, "The operating income is correct, Joan. Sales went up during the second quarter, but the problem is in production. You see, we budgeted to produce 20,000 units each quarter, but a strike in one of our supplier's plants forced us to cut production back to only 14,000 units in the second quarter. That's what caused the drop in operating income." Joan replied, "I don't understand this! I know sales increased, yet you talk about production to explain the drop in income! What does this have to do with the sales that we made? If sales go up, then income ought to go up." Budgeted production and sales for the year, along with actual production and sales for the first two quarters are given below: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Planned (budgeted) sales Actual sales 16,000 20,000 20,000 24,000 16,000 20,000 -> Planned (budgeted) production 20,000 20,000 20,000 20,000 Actual production 20,000 14,000 guz sldning av gahan noilgozdno zool-gitoval The company's plant is heavily automated, so fixed manufacturing overhead costs total $800,000 per quarter. Variable manufacturing costs are $30 per unit. The fixed manufacturing overhead cost is applied to units at the rate of $40 per unit (based on the budgeted production shown above $800,000/20,000 units = $40 per unit). Any Production Volume Variance is closed directly to COGS for the quarter. od ovo == Xmed at doors of mods as a to sew air tert bos 19hup brosa od grub lilli sonizzola ni 92891ni di tuods vqqsil asw e2 The company had 3,000 units in inventory at the start of the first quarter. Variable selling and 101 administrative expenses are $5 per unit. tx of land or gnibusq ni zulq last od blow atluast B Required:omolup owl it or waz dla odw boxborla asw sol noah air 10 1. Prepare a variable cost (contribution format) income statement for the first two quarters.nl (worth 40%) ano Ili 2 IH 2. Explain why the operating incomes are different. (worth 20%) 21stisu owT teri odt 10 3. Explain why the first quarter has a $ 0 Production Volume Variance (PVV) and the second quarter has a $240,000 PVV. Why is the $240,000 PVV added to COGS? (worth 20%) val 958 000.00+ 000.080 000.01$ 2 2000- 4. Given that you may need to consult with owners of small-sized business in the future, what are some of the advantages and disadvantages of preparing a variable costing method income statement for them? (worth 20%) VV 101 DA 000,00 000.08A 2 1916 22010 = nimbA & guills2- oldsins V 000.001 000.0ES 000.0E & 000.08 000.08 000.0V12 boxi amoon! gnit ciollos srit balina vlausibemmi bas 919dw02 1019 s od or bad short mistico asw sol ol 100109 21 smoomi gnilmoqo sd T" batsiz 19lloutno od moldong sdt brit of offto od botagbud av 992 woY noitoubong ni ai moldoni judashup boose or gnhub qu know ? Juo bi zu bootol ainslq 2 oilqque quo to ono ni ruta s jud otsup dose atinu 000.0 01 bor qob or bound a ted up bolt ni atinu 000. ylno of load motobog "moni gril oi nontonboiq juods list woy toy,beasomoni olsa wond 1 leirit bastarobnu 'nob I boilqen neol og asta 11 Sobem w tort 29102 rb diw ob of overl air) 200b jariW !omooni ni qob or mislqxe qu og of Jdquo moniqu Jenit odt not asla bns noiloubouq lsujos diw gnols.169y sri 101 olsa bas noitouboiq betegbu woled revig 9 1ahsuQ 000.1 000,0 &000,0 000.01 aslea (bolagbud) bonnett 000.0$ 000.al
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Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
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