Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units x $42.60 per unit) Cost of goods sold (39,000 units × $25 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,661,400 975,000 686,400 487,500 $ 198,900 The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $5 per unit sold in variable expenses. The $25 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($240,000 ÷ 48,000 units) Absorption costing unit product cost $ 11 5 4 5 $ 25

Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units x $42.60 per unit) Cost of goods sold (39,000 units × $25 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,661,400 975,000 686,400 487,500 $ 198,900 The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $5 per unit sold in variable expenses. The $25 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($240,000 ÷ 48,000 units) Absorption costing unit product cost $ 11 5 4 5 $ 25

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 58P: Cost of Goods Manufactured, Income Statement W. W. Phillips Company produced 4,000 leather recliners...

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Cost of Goods Manufactured, Income Statement W. W. Phillips Company produced 4,000 leather recliners during the year. These recliners sell for 400 each. Phillips had 500 recliners in finished goods inventory at the beginning of the year. At the end of the year, there were 700 recliners in finished goods inventory. Phillips accounting records provide the following information: Required: 1. Prepare a statement of cost of goods manufactured. 2. Compute the average cost of producing one unit of product in the year. 3. Prepare an income statement for external users.
During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of $5,500,000 and average capital assets of $12,000,000. A. Based on this information, calculate asset turnover. B. Using the sales margin from the previous exercise, what is the total ROI for the company during the current year?
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (42,000 units x $43.60 per unit) Cost of goods sold (42,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,831, 200 966,000 865,200 483,000 $ 382,200 The company's selling and administrative expenses consist of $315,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Direct materials. Direct labor $ 10 4 Variable manufacturing overhead 3 Fixed manufacturing overhead ($276,000 46,000 units) 6 Absorption costing unit product cost $ 23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…
Whitman Company has just completed its first year of operations. The company’s absorption costing income statement for the year follows: Whitman CompanyIncome Statement Sales (39,000 units × $43.10 per unit) $ 1,680,900 Cost of goods sold (39,000 units × $24 per unit) 936,000 Gross margin 744,900 Selling and administrative expenses 448,500 Net operating income $ 296,400 The company’s selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows: Direct materials $ 12 Direct labor 4 Variable manufacturing overhead 3 Fixed manufacturing overhead ($255,000 ÷ 51,000 units) 5 Absorption costing unit product cost $ 24 Required: 1. Redo the company’s income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net…
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (38,000 units x $44.60 per unit) Cost of goods sold (38,000 units × $24 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,694,800 912,000 782,800 475,000 $ 307,800 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variable expenses. The $24 unit product cost given above is computed as follows: Direct materials Variable manufacturing overhead $ 10 Direct labor 4 4 Fixed manufacturing overhead ($294,000 ÷ 49,000 units) 6 $ 24 Absorption costing unit product cost Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (40,000 units x $44.60 per unit) Cost of goods sold (40,000 units x $22 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,784,000 880,000 904,000 460,000 $ 444,000 The company's selling and administrative expenses consist of $300,000 per year in fixed expenses and $4 per unit sold in variable expenses. The $22 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($180,000 + 45,000 units) Absorption costing unit product cost Required: $ 10 5 3 4 $ 22 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption…
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follws: Year 2 Sales (e $64 per unit) Cost of goods sold (e $37 per unit) Gross margin Selling and administrative expenses Year 1 $ 1,152, 000 $ 1,792, 000 666, 000 486, 000 301, 000 $ 185, 000 1,836, 000 756, 000 331, 000 $ 425, 000 Net operating incone •$3 per unit varlable, $247,000 fixed each year. The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufactüring overhead ($391, 00e + 23, 000 units) $ 6 10 4. 17 $ 37 Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 23, 000 18, 000 Year 2 23, 000 28, 000 Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the…
During Heaton Company's first two years of operations, It reported absorption costing net operating income as follows: Sales (e $63 per unit) Cost of goods sold (e $37 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 1,071,000 629,000 442,000 298,000 $ 144,000 Year 2 $ 1,701,000 999,000 702,000 328,000 $ 374,000 $3 per unit variable; $247,000 fixed each year. The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($374,000 + 22,000 units) Absorption costing unit product cost $ 5 10 17 $ 37 Production and cost data for the first two years of operations are: Year 1 22,000 17,000 Year 2 Units produced Units sold 22,000 27,000 Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable costing net…
Whitman Company has just completed its first year of operations. The company's absorption costing income statement for the year follows: Whitman Company Income Statement Sales (39,000 units x $42.10 per unit) Cost of goods sold (39,000 units x $23 per unit) Gross margin Selling and administrative expenses Net operating income The company's selling and administrative expenses consist of $292,500 per year in fixed expenses and $4 per unit sold in variable expenses. The $23 unit product cost given above is computed as follows: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($306,000+ 51,000 units) Absorption costing unit product cost $ 1,641,900 897,000 744,900 448,500 $ 296,400 Required 1 Required 2 $10 4 3 6 $23 Required: 1. Redo the company's income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on…
During Denton Company’s first two years of operations, the company reported absorption costing net operating income as follows:Year 1 Year 2Sales (@ $63 per unit) year 1$ 1,260,000 year 2 $ 1,890,000 Cost of goods sold (@ $35 per unit) year 1. $700,000 year 2.$1,050,000 Gross margin year 1$560,000 year 2 $840,000 Selling and administrative expenses*year 1 $312,000 year 2 $342,000 Net operating incomeyear 1$ 248,000 year 2$ 498,000 $3 per unit variable; $252,000 fixed each year.The company’s $35 unit product cost is computed as follows:Direct materials $ 7 Direct labor $8 Variable manufacturing overhead $3 Fixed manufacturing overhead ($425,000 ÷ 25,000 units) $17 Absorption costing unit product cost $ 35 Production and cost data for the two years are given below: Year 1 Year 2Units produced $25,000 $25,000Units sold. $20,000 $30,000 Prepare a variable costing contribution format income statement for each year. Reconcile the absorption costing and…
Whitman Company has just completed its fi rst year of operations. The company’s absorption costing income statement for the year appears below: Whiteman CompanyIncome Statement Sales (35000 units)Rs.875,000 Cost of goods sold @ of Rs.16 per unit560,000 Gross Profit315,000 Selling and Administrative expenses280,000 Net operating income35,000 The company’s selling and administrative expenses consist of Rs.210,000 per year in fixed expenses and Rs.2 per unit sold in variable expenses. The Rs.16 per unit product cost given above is computed as follows:Direct MaterialsRs.5 Direct Labour6 Variable manufacturing overhead1 Fixed manufacturing overhead (Rs.160,000 ÷ 40,000 units)4 Absorption costing unit product cost16 Required: Redo the company’s income statement in the contribution format using variable costing. Reconcile any difference between the net operating income on your variable costing income statement and the net operating income on the absorption costing income statement…
During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $64 per unit) Cost of goods sold (@ $36 per unit) Gross margin Year 1 $ 1,152,000 648,000 504,000 302,000 $ 202,000 Year 2 $ 1,792,000 1,008,000 784,000 332,000 $ 452,000 Selling and administrative expenses* Net operating income * $3 per unit variable; $248,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($345,000 ÷ 23,000 units) Absorption costing unit product cost $ 9 10 2 15 $ 36 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 23,000 23,000 18,000 28,000 Units sold Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable costing net…