The Tamarisk manufactures double-sided pens-a pen on one side, a highlighter on the other. As the...
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The Tamarisk manufactures double-sided pens-a pen on one side, a highlighter on the other. As the accounting manager, Shade is responsible for presenting three different versions of the company's income statement to the rest of the management team at year- end. Team members are very familiar with absorption costing, as they have been evaluating gross margin amounts and percentages for years. They are less keen on how fixed-MOH impacts the income statement, so Shade gathers the following current information. The information includes three possible capacity levels for calculating the fixed-MOH rate. Shade also notes there are no price or efficiency variances this period. Any fixed-MOH volume variance is written off to COGS. Theoretical level Practical level Normal level 93,000 units 55,800 units 45,000 units Actual production 59,800 units Sales volume 50,000 units Budgeted fixed-MOH cost $279,000 Budgeted DM cost $2.27 per unit Budgeted DL cost $1.30 per unit Budgeted variable-MOH cost $0.30 per unit Selling price $16.00 per unit Prepare partial income statements through gross margin for each denominator level. Sales Less : COGS Unadjusted COGS Fixed-MOH Volume Variance Adjusted COGS Gross Margin +A $ Income statements Theoretical $ $ 99600 i Practical $ $ tA 20000 i Normal $ $ SA $ 91760 i The Tamarisk manufactures double-sided pens-a pen on one side, a highlighter on the other. As the accounting manager, Shade is responsible for presenting three different versions of the company's income statement to the rest of the management team at year- end. Team members are very familiar with absorption costing, as they have been evaluating gross margin amounts and percentages for years. They are less keen on how fixed-MOH impacts the income statement, so Shade gathers the following current information. The information includes three possible capacity levels for calculating the fixed-MOH rate. Shade also notes there are no price or efficiency variances this period. Any fixed-MOH volume variance is written off to COGS. Theoretical level Practical level Normal level 93,000 units 55,800 units 45,000 units Actual production 59,800 units Sales volume 50,000 units Budgeted fixed-MOH cost $279,000 Budgeted DM cost $2.27 per unit Budgeted DL cost $1.30 per unit Budgeted variable-MOH cost $0.30 per unit Selling price $16.00 per unit Prepare partial income statements through gross margin for each denominator level. Sales Less : COGS Unadjusted COGS Fixed-MOH Volume Variance Adjusted COGS Gross Margin +A $ Income statements Theoretical $ $ 99600 i Practical $ $ tA 20000 i Normal $ $ SA $ 91760 i
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