Question: Variable Costing and Absorption Costing - Questions 1 - 8. Production Costs Nonproduction Costs Direct materials cost$4 per unitVariable S&A expenses$2 per unit Direct labor

Variable Costing and Absorption Costing - Questions 1 - 8.

Production CostsNonproduction Costs

Direct materials cost$4 per unitVariable S&A expenses$2 per unit

Direct labor cost$8 per unitFixed S&A expenses$200,000 per year

Variable overhead cost$3 per unit

Fixed overhead cost$600,000 per year

Sales price/unit$40

Units ProducedUnits Sold Units in Ending Inventory

200960,00060,0000

201060,00045,00015,000

201160,00075,0000

UNITS PRODUCED EXCEED UNITS SOLD

ICEAGE COMPANY

Income Statement (Absorption Costing)

For Year Ended December 31, 2010

Sales

Cost of goods sold

Gross margin

S&A expenses

Net income

ICEAGE COMPANY

Income Statement (Variable Costing)

For Year Ended December 31, 2010

Sales

Variable expenses

Variable production costs

Variable S&A expenses

Contribution margin

Fixed expenses

Fixed overhead

Fixed S&A expenses

Net income

Variable Costing and Absorption Costing

UNITS PRODUCED ARE LESS THAN UNITS SOLD

ICEAGE COMPANY

Income Statement (Absorption Costing)

For Year Ended December 31, 2011

Sales

Cost of goods sold

Gross margin

S&A expenses

Net income

ICEAGE COMPANY

Income Statement (Variable Costing)

For Year Ended December 31, 2011

Sales

Variable expenses

Variable production costs

Variable S&A expenses

Contribution margin

Fixed expenses

Fixed overhead

Fixed S&A expenses

Net income

1.What is gross margin if 45,000 units are sold?

A.$650,000

B.$675,000

C.$700,000

D.$725,000

2.What is net income under absorption costing if 45,000 units are sold?

A.$375,000

B.$380,000

C.$385,000

D.$390,000

3.What is contribution margin if 45,000 units are sold?

A.$1,035,000

B.$1,040,000

C.$1,045,000

D.$1,050,000

4.What is net income under variable costing if 45,000 units are sold?

A.$190,000

B.$205,000

C.$220,000

D.$235,000

5.What is gross margin if 75,000 units are sold?

A. $1,123,000

B.$1,125,000

C.$1,230,000

D.$1,345,000

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Variable Costing and Absorption Costing Questions 1 8. Production Costs Nonproduction Costs Direct materials cost $4 per unit Variable S&A expenses $2 per unit Direct labor cost $8 per unit Fixed S&A...

Production Costs Nonproduction Costs Direct materials cost $4 per unit Variable S&A expenses $2 per unit Direct labor cost $8 per unit Fixed S&A expenses $200,000 per year Variable overhead cost $3...

need requirements five through 10 Requirement 5. Prepare the manufacturing overhead cost budgets for each of the three activities Begin the manufacturing overhead cost budgets for each of the three...

**ANSWER ONLY TO 5-9*** 6-33 Comprehensive problem with ABC costing. Pet Luggage Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but...

Please urgently answer all questions SECTION A [100 MARKS] Answer ALL the questions in this section. Use the information provided below to calculate the following variances. In each case state...

Questions 1- identify Direct Material, Indirect material, Direct Labor, indirect Labor cost for your business. 2- Prepare inventory costing sheet. 3-Calculate Breakeven in units and dollars....

I am struggling to answer the rest of REQUIREMENTS 5-9. Please assist if possible. I have included an example of a worked-out problem for a reference and then under I will post my actual problem that...

Mmahajan, As promised, I have some more questions for you. I will also have more next week. Please view the attachment and let me know if you can do the problems. You do not need to use a spreadsheet...

Answer following four (4) problems. 1) Identify the treatment of each of the following costs under variable costing and absorption costing: Variable Costing Product Period Cost Cost Absorption...

On January 1, 2021, Monty Corp. had 459,000 shares of common stock outstanding. During 2021, it had the following transactions that effected the Common Stock account. February 1 Issued 123,000 shares...

The grade of a road is defined as the distance it rises (or falls) to the distance it runs horizontally, usually expressed as a percentage. Consider a road with positive grade, g. Suppose that you...

Rewrite without parentheses. - 5 v ^ ( 6 ) ( - 8 v ^ ( 3 ) - 4 v ^ ( 2 ) + 9 v ) Simplify your answer as much as possible.

Argo Oil & Gas Company was loading a tanker with fuel oil when the loading hose snapped for an unknown reason and about 2,000 gallons of fuel oil poured into the Pacific Ocean. Argo was sued for this...

7. Fill out the form below. Only the most important roles and your basic values are to be filled.

10. Try to remember the last communication you entered into. How many times did you fill in information that the other person did not convey? How many times did you speak before the other person...

6. Think of a situation where you noticed that the other person or people did not like or understand your behaviour. Examine your own intentions behind the behaviour.