PNH Company produces plastic specialty toys. In 2022, the company produced and sold 80,000 toys. Each toy was sold at $8 and has the following production costs:

Selling and administrative costs for the year consisted of variable costs of $0.50 per toy and fixed costs of $140,000 for the period.
a. Using Excel, prepare an income statement in good form for financial reporting by product versus period cost functions.

b. Using Excel, prepare an income statement in good form for internal reporting by cost behavior of variable costs versus fixed cost behavior.

c. Assume that the relevant range for the company is from 60,000 to 110,000 units. Using Excel, prepare an internal reporting income statement assuming that the company actually produces and sells 60,000 toys.

d. Assume that the relevant range for the company is from 60,000 to 110,000 units. Using Excel, prepare an internal reporting income statement assuming that the company actually produces and sells 100,000 toys.

e. Describe which questions and relevant financial and nonfinancial information the owners should also examine to be sure that the assumptions are valid.

f. How could this information be presented visually to better communicate potential decisions? Discuss.

g. Would this company benefit from storyboarding the processes and related costs or from tracking costs by observations? Discuss.

Transcribed Image Text:

Direct materials Direct labor Variable overhead Fixed overhead Total $1.90 $0.65 $0.35 $1.60 $4.50