Vacuum Magic Company manufacturers a professional-grade vacuum cleaner and began operations in 2020. For 2020, Vacuum...

   

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Vacuum Magic Company manufacturers a professional-grade vacuum cleaner and began operations in 2020. For 2020, Vacuum Magic budgeted to produce and sell 26,000 units. The company had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2020 are given as follows: (Click the icon to view the actual data for 2020.) Read the requirements. Requirement 1. Prepare a 2020 income statement for Vacuum Magic Company using variable costing. Complete the top half of the income statement first, then complete the bottom portion. (For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) Variable Costing Revenues Variable cost of goods sold: Variable manufacturing costs $ 7,740,000 i Requirements 1. Prepare a 2020 income statement for Vacuum Magic Company using variable costing. 2. Prepare a 2020 income statement for Vacuum Magic Company using absorption costing. X 3. Explain the differences in operating incomes obtained in requirements 1 and 2. 4. Vacuum Magic's management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this bonus plan create for the supervisors? What modifications could Vacuum Magic management make to improve such a plan? Explain briefly. 1 2 Units produced Units sold 3 Selling price 4 5 6 7 8 9 10 11 12 13 A Variable costs: Manufacturing cost per unit produced: Direct materials Direct manufacturing labor Manufacturing overhead Marketing cost per unit sold Fixed costs: Manufacturing costs Administrative costs Marketing costs $ $ B 23,000 18,000 430 30 27 50 50 $1,300,000 1,045,100 1,508,600 Vacuum Magic Company manufacturers a professional-grade vacuum cleaner and began operations in 2020. For 2020, Vacuum Magic budgeted to produce and sell 26,000 units. The company had no price, spending, or efficiency variances and writes off production-volume variance to cost of goods sold. Actual data for 2020 are given as follows: (Click the icon to view the actual data for 2020.) Read the requirements. Requirement 1. Prepare a 2020 income statement for Vacuum Magic Company using variable costing. Complete the top half of the income statement first, then complete the bottom portion. (For amounts with a $0 balance, make sure to enter "0" in the appropriate input field.) Variable Costing Revenues Variable cost of goods sold: Variable manufacturing costs $ 7,740,000 i Requirements 1. Prepare a 2020 income statement for Vacuum Magic Company using variable costing. 2. Prepare a 2020 income statement for Vacuum Magic Company using absorption costing. X 3. Explain the differences in operating incomes obtained in requirements 1 and 2. 4. Vacuum Magic's management is considering implementing a bonus for the supervisors based on gross margin under absorption costing. What incentives will this bonus plan create for the supervisors? What modifications could Vacuum Magic management make to improve such a plan? Explain briefly. 1 2 Units produced Units sold 3 Selling price 4 5 6 7 8 9 10 11 12 13 A Variable costs: Manufacturing cost per unit produced: Direct materials Direct manufacturing labor Manufacturing overhead Marketing cost per unit sold Fixed costs: Manufacturing costs Administrative costs Marketing costs $ $ B 23,000 18,000 430 30 27 50 50 $1,300,000 1,045,100 1,508,600

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1 Income statement Under Absorption costing Manufacturing Cost per unit Variable cost Manufacturing ... View the full answer