Edmunds Launching - Absorption Income and Variable/Throughput Income ubje Beginning FG inventory in units Units Produced...

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Edmunds Launching - Absorption Income and Variable/Throughput Income ubje Beginning FG inventory in units Units Produced Units Sold Sales Material Costs ge ru The Edmunds Launching Company is trying to make sense of their income for the last two years. When managers assume that income is on the rise, it falls. They have two years of data for you to review and to help them in their analysis: Year 1 Year 2 100 ? 3,000 1,000 2,000 2,000 $800,000 $800,000 Variable Labor $150,000 $50,000 Variable Overhead Fixed Overhead $90,000 $90,000 $24,000 $8,000 Variable Selling & Administration $240,000 $240,000 Fixed Selling and Administrative Expense $60,000 $60,000 $120,000 $120,000 Additional information: The costs and revenues for Year 0 were identical to those for Year 1. Work-in-Process beginning and ending inventories are zero for Years 0, 1, and 2. There are no price changes or inflation from Year 1 to Year 2. The amount of beginning inventory for Year 2 is missing. Please determine how many units are in beginning inventory. Determine the income using both absorption and variable/throughput costing. Include an income reconciliation for both years to mathematically explain why absorption and variable/throughput incomes are not equal for each year, since the sales volumes are the same. Present the data to managers so that they understand any income fluctuations. Include in your discussion the factors that can change income for each method of determining income (absorption and variable/throughput). Edmunds Launching - Absorption Income and Variable/Throughput Income ubje Beginning FG inventory in units Units Produced Units Sold Sales Material Costs ge ru The Edmunds Launching Company is trying to make sense of their income for the last two years. When managers assume that income is on the rise, it falls. They have two years of data for you to review and to help them in their analysis: Year 1 Year 2 100 ? 3,000 1,000 2,000 2,000 $800,000 $800,000 Variable Labor $150,000 $50,000 Variable Overhead Fixed Overhead $90,000 $90,000 $24,000 $8,000 Variable Selling & Administration $240,000 $240,000 Fixed Selling and Administrative Expense $60,000 $60,000 $120,000 $120,000 Additional information: The costs and revenues for Year 0 were identical to those for Year 1. Work-in-Process beginning and ending inventories are zero for Years 0, 1, and 2. There are no price changes or inflation from Year 1 to Year 2. The amount of beginning inventory for Year 2 is missing. Please determine how many units are in beginning inventory. Determine the income using both absorption and variable/throughput costing. Include an income reconciliation for both years to mathematically explain why absorption and variable/throughput incomes are not equal for each year, since the sales volumes are the same. Present the data to managers so that they understand any income fluctuations. Include in your discussion the factors that can change income for each method of determining income (absorption and variable/throughput).

Answer rating: 100% (QA)

To begin lets find the beginning inventory for Year 2 We can calculate it by subtracting the units produced from the units sold and the beginning inve... View the full answer