Question: Need all requirements including 2b and everything after it please! Arcade Away manufactures video games that it sells for $45 each. The company uses




X Requirements 1. Compute the product cost per game produced under absorption costing and under variable costing. 2. Prepare monthly income statements for October and November, including columns for each month and a total column, using these costing methods: a. absorption costing. b. variable costing. 3. Is operating income higher under absorption costing or variable costing in October? In November? Explain the pattern of differences in operating income based on absorption costing versus variable costing. 4. Determine the balance in Finished Goods Inventory on October 31 and November 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based on absorption costing versus variable costing. Data table October 1,800 units 2,700 units 14 $ November 2,800 units 2,700 units 14 $ Sales Production Variable manufacturing cost per game Sales commission cost per game Total fixed manufacturing overhead Total fixed selling and administrative costs 3 3 16,200 16,200 10,000 10,000 14 Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing. October November Absorption Variable Absorption Variable costing costing costing costing Total product cost per game $ 20 $ 14 5 20 $ Requirement 2a. Prepare monthly income statements for October and November, including columns for each month and a total column, using absorption costing. Arcade Away Absorption Costing Income Statement October November Net Sales Revenue 81,000 $ 126,000 $ 207,000 Cost of Goods Sold 36,000 56,000 92,000 Gross Profit 70.000 115,000 Selling and Administrative Costs 15,400 18,400 33,800 29,600 $ 51.600 $ 81,200 Operating Income Total 45,000 Requirement 2b. Prepare monthly income statements for October and November, including columns for each month and a total column, using variable costing. Arcade Away Variable Costing Income Statement October November Total Net Sales Revenue 81000 126000 207000 Cost of Goods Sold 36000 Contribution Margin 53200 Selling and Administrative Costs Operating Income 56000 92000 34200 87400
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
