i Data Table January February March Unit data: Beginning inventory Production 0 150 150 1,000 925 1,025 Sales 850 925 1,055 Variable costs: GA 700 $ 700 $ 700 $ 575 $ 575 $ 575 Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs $ 480,000 $ 140,000 $ 480,000 $ 140,000 $ $ 480,000 140,000 1. HD Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: (Click to view the data.) The selling price per unit is $3,800. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,000 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. Read the requirements? Requirement 1. Prepare income statements for HD in January, February, and March 2017 under (a) variable costing and (b) absorption costing. (a). Prepare income statements for HD in January, February, and March of 2017 under variable costing. Complete the top half of the income statement for each month first, then complete the bottom portion (Complete all answer boxes. Enter a "0" for any zero balance accounts.) January 2017 February 2017 March 2017 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (b). Prepare income statements for HD in January, February, and March 2017 under absorption costing. Complete the top half of the income statement for each month first, then complete the bottom portion. (Enter a "0" for any zero balance accounts. Label any variances as favorable (F) or unfavorable (U). If an account does not have a variance, da not select a label. Abbreviation used; Adj. = Adjustment, Mfg. - Manufacturing.) January 2017 February 2017 March 2017 (13) (14) (15) |(16) (17) (18) (19) (22) (28) (20) (24) (25) (26) (27) (28) Requirement 2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing. Begin by preparing a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Determine the formula that will highlight the difference between the operating Income under each method. Then complete the equation for each month. (Enter an amount in each input cell and enter a "O" for any zero balances, Abbreviations used: Beg. = beginning, End. = ending, Mfg. - Manufacturing, and Var. = Variable.) Absorption-costing Variable-costing operating income operating income = (29) (30) Jan Feb Mar Into inventories as The difference between absorption and variable costing is due solely to moving (31) inventories (32) and out of inventories as they (33) 1: Data Table January February March 0 150 150 925 1,025 1,000 850 925 1,055 Unit data: Beginning inventory Production Sales Variable costs: Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs 700 $ $ $ 700 $ 575 $ 700 575 575 S $ 480,000 $ 480,000 $ 140,000 $ 140,000 $ 480,000 140,000 $ 2: Requirements 1. Prepare income statements for HD in January February, and March 2017 under (a) variable costing and (b) absorption costing, 2. Explain the difference in operating income for January, February, and March under variable costing and abs- costing (1) O O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Deduct ending Inventory O Beginning inventory Fixed manufacturing costs Fixed operating costs O Variable cost of goods sold O Gross margin Variable manufacturing costs Operating income Variable operating costs Revenues Fixed costs: O Operating costs: Variable cost of goods sold: (3) O Contribution margin O Adjustment for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Deduct ending Inventory Beginning inventory Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin O Variable manufacturing costs Operating income O Variable operating costs Revenues (4) O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Deduct ending inventory Beginning inventory Fixed manufacturing costs Fixed operating costs Variable cost of goods sold O Gross margin O Variable manufacturing costs Operating income Variable operating costs O Revenues (5) O Contribution margin O Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Deduct ending inventory O Beginning inventory O Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin Variable manufacturing costs O Operating income O Variable operating costs Revenues (6) O Contribution margin O Adjustment for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Deduct ending inventory Beginning inventory Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin O Variable manufacturing costs O Operating income O Variable operating costs Revenues (7) O O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs O Deduct ending inventory Beginning inventory O Fixed manufacturing costs Fixed operating costs O Variable cost of goods sold Gross margin Variable manufacturing costs Operating income O Variable operating costs Revenues (8) O Contribution margin Adjustment for production-volume variance O Cost of goods available for sale Allocated fixed manufacturing costs Deduct ending inventory Beginning inventory O Fixed manufacturing costs Fixed operating costs O Variable cost of goods sold Gross margin O Variable manufacturing costs O Operating income O Variable operating costs Revenues (9) O Contribution margin Adjustment for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Deduct ending inventory O Beginning inventory O Fixed manufacturing costs O Fixed operating costs Variable cost of goods sold O Gross margin Variable manufacturing costs Operating income O Variable operating costs O Revenues (10) O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs O Deduct ending inventory O Beginning inventory O Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin O Variable manufacturing costs Operating income Variable operating costs Revenues (11) Contribution margin O Adjustment for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs O Deduct ending Inventory O Beginning inventory Fixed manufacturing costs O Fixed operating costs Variable cost of goods sold O Gross margin Variable manufacturing costs Operating income O Variable operating costs Revenues (12) O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs O Deduct ending inventory Beginning inventory Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin O Variable manufacturing costs o Operating income Variable operating costs Revenues (13) O O Contribution margin O Adj. for production-volume variance O Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory Deduct ending inventory O Fixed manufacturing costs Revenues Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs o Operating income (14) O Variable costs: O Cost of goods sold: Fixed costs: Operating costs: (15) O O Contribution margin Adj. for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Cost of goods sold Beginning inventory O Deduct ending inventory O Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin Variable operating costs Operating income (16) O Contribution margin O Adj, for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold Beginning inventory O Deduct ending inventory Fixed manufacturing costs Revenues Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs Operating income (17) O Contribution margin O Adj, for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory Deduct ending inventory Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs Operating income (18) O Contribution margin O Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory O Deduct ending inventory O Fixed manufacturing costs Revenues O Fixed operating costs Variable manufacturing costs O Gross margin O Variable operating costs Operating income (19) Contribution margin O Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold Beginning inventory Deduct ending inventory Fixed manufacturing costs O Revenues O Fixed operating costs Variable manufacturing costs O Gross margin Variable operating costs O Operating income (20) O O Contribution margin Adj. for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory O Deduct ending inventory O Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs Gross margin Variable operating costs Operating income (21) O OF ou (22) O OF OU (23) O OF OU (24) O Contribution margin Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold Beginning inventory Deduct ending inventory O Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin Variable operating costs Operating income (25) O O Contribution margin Adj. for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory Deduct ending inventory O Fixed manufacturing costs O Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin Variable operating costs o Operating income (26) O O Contribution margin O Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs O Cost of goods sold O Beginning inventory Deduct ending inventory Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs Operating income (27) O Contribution margin O Adj. for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs O Cost of goods sold O Beginning inventory O Deduct ending inventory Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin Variable operating costs O Operating income (28) O O Contribution margin O Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory Deduct ending inventory Fixed manufacturing costs O Revenues Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs Operating income (29) O O Var, mfg costs in beg. inventory Fixed mfg costs in beg. inventory O Var, mfg costs in end, inventory O Fixed mfg costs in end. inventory O Var. operating costs O Fixed operating costs (30) O O Var. mfg costs in beg. inventory Fixed mfg costs in beg. inventory O Var. mfg costs in end. inventory O Fixed mfg costs in end. inventory Var. operating costs Fixed operating costs (31) O fixed manufacturing costs fixed operating costs O variable manufacturing costs O variable operating costs (32) O decrease O increase (33) O decrease o increase i Data Table January February March Unit data: Beginning inventory Production 0 150 150 1,000 925 1,025 Sales 850 925 1,055 Variable costs: GA 700 $ 700 $ 700 $ 575 $ 575 $ 575 Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs $ 480,000 $ 140,000 $ 480,000 $ 140,000 $ $ 480,000 140,000 1. HD Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: (Click to view the data.) The selling price per unit is $3,800. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,000 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. Read the requirements? Requirement 1. Prepare income statements for HD in January, February, and March 2017 under (a) variable costing and (b) absorption costing. (a). Prepare income statements for HD in January, February, and March of 2017 under variable costing. Complete the top half of the income statement for each month first, then complete the bottom portion (Complete all answer boxes. Enter a "0" for any zero balance accounts.) January 2017 February 2017 March 2017 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (b). Prepare income statements for HD in January, February, and March 2017 under absorption costing. Complete the top half of the income statement for each month first, then complete the bottom portion. (Enter a "0" for any zero balance accounts. Label any variances as favorable (F) or unfavorable (U). If an account does not have a variance, da not select a label. Abbreviation used; Adj. = Adjustment, Mfg. - Manufacturing.) January 2017 February 2017 March 2017 (13) (14) (15) |(16) (17) (18) (19) (22) (28) (20) (24) (25) (26) (27) (28) Requirement 2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing. Begin by preparing a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Determine the formula that will highlight the difference between the operating Income under each method. Then complete the equation for each month. (Enter an amount in each input cell and enter a "O" for any zero balances, Abbreviations used: Beg. = beginning, End. = ending, Mfg. - Manufacturing, and Var. = Variable.) Absorption-costing Variable-costing operating income operating income = (29) (30) Jan Feb Mar Into inventories as The difference between absorption and variable costing is due solely to moving (31) inventories (32) and out of inventories as they (33) 1: Data Table January February March 0 150 150 925 1,025 1,000 850 925 1,055 Unit data: Beginning inventory Production Sales Variable costs: Manufacturing cost per unit produced Operating (marketing) cost per unit sold Fixed costs: Manufacturing costs Operating (marketing) costs 700 $ $ $ 700 $ 575 $ 700 575 575 S $ 480,000 $ 480,000 $ 140,000 $ 140,000 $ 480,000 140,000 $ 2: Requirements 1. Prepare income statements for HD in January February, and March 2017 under (a) variable costing and (b) absorption costing, 2. Explain the difference in operating income for January, February, and March under variable costing and abs- costing (1) O O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Deduct ending Inventory O Beginning inventory Fixed manufacturing costs Fixed operating costs O Variable cost of goods sold O Gross margin Variable manufacturing costs Operating income Variable operating costs Revenues Fixed costs: O Operating costs: Variable cost of goods sold: (3) O Contribution margin O Adjustment for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Deduct ending Inventory Beginning inventory Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin O Variable manufacturing costs Operating income O Variable operating costs Revenues (4) O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Deduct ending inventory Beginning inventory Fixed manufacturing costs Fixed operating costs Variable cost of goods sold O Gross margin O Variable manufacturing costs Operating income Variable operating costs O Revenues (5) O Contribution margin O Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Deduct ending inventory O Beginning inventory O Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin Variable manufacturing costs O Operating income O Variable operating costs Revenues (6) O Contribution margin O Adjustment for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Deduct ending inventory Beginning inventory Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin O Variable manufacturing costs O Operating income O Variable operating costs Revenues (7) O O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs O Deduct ending inventory Beginning inventory O Fixed manufacturing costs Fixed operating costs O Variable cost of goods sold Gross margin Variable manufacturing costs Operating income O Variable operating costs Revenues (8) O Contribution margin Adjustment for production-volume variance O Cost of goods available for sale Allocated fixed manufacturing costs Deduct ending inventory Beginning inventory O Fixed manufacturing costs Fixed operating costs O Variable cost of goods sold Gross margin O Variable manufacturing costs O Operating income O Variable operating costs Revenues (9) O Contribution margin Adjustment for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Deduct ending inventory O Beginning inventory O Fixed manufacturing costs O Fixed operating costs Variable cost of goods sold O Gross margin Variable manufacturing costs Operating income O Variable operating costs O Revenues (10) O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs O Deduct ending inventory O Beginning inventory O Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin O Variable manufacturing costs Operating income Variable operating costs Revenues (11) Contribution margin O Adjustment for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs O Deduct ending Inventory O Beginning inventory Fixed manufacturing costs O Fixed operating costs Variable cost of goods sold O Gross margin Variable manufacturing costs Operating income O Variable operating costs Revenues (12) O Contribution margin Adjustment for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs O Deduct ending inventory Beginning inventory Fixed manufacturing costs O Fixed operating costs O Variable cost of goods sold O Gross margin O Variable manufacturing costs o Operating income Variable operating costs Revenues (13) O O Contribution margin O Adj. for production-volume variance O Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory Deduct ending inventory O Fixed manufacturing costs Revenues Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs o Operating income (14) O Variable costs: O Cost of goods sold: Fixed costs: Operating costs: (15) O O Contribution margin Adj. for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Cost of goods sold Beginning inventory O Deduct ending inventory O Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin Variable operating costs Operating income (16) O Contribution margin O Adj, for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold Beginning inventory O Deduct ending inventory Fixed manufacturing costs Revenues Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs Operating income (17) O Contribution margin O Adj, for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory Deduct ending inventory Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs Operating income (18) O Contribution margin O Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory O Deduct ending inventory O Fixed manufacturing costs Revenues O Fixed operating costs Variable manufacturing costs O Gross margin O Variable operating costs Operating income (19) Contribution margin O Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold Beginning inventory Deduct ending inventory Fixed manufacturing costs O Revenues O Fixed operating costs Variable manufacturing costs O Gross margin Variable operating costs O Operating income (20) O O Contribution margin Adj. for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory O Deduct ending inventory O Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs Gross margin Variable operating costs Operating income (21) O OF ou (22) O OF OU (23) O OF OU (24) O Contribution margin Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold Beginning inventory Deduct ending inventory O Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin Variable operating costs Operating income (25) O O Contribution margin Adj. for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory Deduct ending inventory O Fixed manufacturing costs O Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin Variable operating costs o Operating income (26) O O Contribution margin O Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs O Cost of goods sold O Beginning inventory Deduct ending inventory Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs Operating income (27) O Contribution margin O Adj. for production-volume variance Cost of goods available for sale Allocated fixed manufacturing costs O Cost of goods sold O Beginning inventory O Deduct ending inventory Fixed manufacturing costs Revenues O Fixed operating costs O Variable manufacturing costs O Gross margin Variable operating costs O Operating income (28) O O Contribution margin O Adj. for production-volume variance Cost of goods available for sale O Allocated fixed manufacturing costs Cost of goods sold O Beginning inventory Deduct ending inventory Fixed manufacturing costs O Revenues Fixed operating costs O Variable manufacturing costs O Gross margin O Variable operating costs Operating income (29) O O Var, mfg costs in beg. inventory Fixed mfg costs in beg. inventory O Var, mfg costs in end, inventory O Fixed mfg costs in end. inventory O Var. operating costs O Fixed operating costs (30) O O Var. mfg costs in beg. inventory Fixed mfg costs in beg. inventory O Var. mfg costs in end. inventory O Fixed mfg costs in end. inventory Var. operating costs Fixed operating costs (31) O fixed manufacturing costs fixed operating costs O variable manufacturing costs O variable operating costs (32) O decrease O increase (33) O decrease o increase