Summarized data for 2019 (the first year of operations) for Gorman Products, In. are as follows Sales
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Summarized data for 2019 (the first year of operations) for Gorman Products, In. are as follows
Sales (70,000 units) | $2,800,00 |
Production costs (80,000 units): | |
Direct materials | 880,000 |
Direct labor | 720,000 |
Manufacturing overhead: | |
Variable | 544,000 |
Fixed | 320,000 |
Operating expenses: | |
Variable | 175,000 |
Fixed | 240,000 |
Depreciation on equipment | 60,000 |
Real estate taxes | 18,000 |
Personal property taxes (inventory and equipment | 28,000 |
Personnel department expenses | 30,000 |
a.) Prepare an income statement based on full absortion costing
b) Prepare an income statement based on variable costing.
c) Assume that you must decide quickly whether to accept a special one-time order for 1000 units for $25 per unit. Which income statement present the most relevant data? Determine the apparent profit or loss on the special order based solely on these data.
d) If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why?
Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe , Mark Nelson, Wayne Thomas
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