Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

18-5. Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These

18-5. Yale Company manufactures hair brushes that sell at wholesale for $3 per unit. The company had no beginning inventory in the prior year. These data summarize the current and prior year operations:

Prior Year Current Year
Sales 2,500 units 4,300 units
Production 3,400 units 3,400 units
Production cost
Factoryvariable (per unit) $ 0.60 $ 0.60
fixed $ 1,700 $ 1,700
Marketingvariable $ 0.40 $ 0.40
Administrativefixed $ 500 $ 500

Required:

1. Prepare an income statement for each year based on full costing.

image text in transcribed

2. Prepare an income statement for each year based on variable costing.

image text in transcribed

3. Prepare a reconciliation of the difference each year in the operating income resulting from using the full costing method and variable costing method.

image text in transcribed

YALE COMPANY Full Costing Income Statement Prior Year Current Year Sales Less: Cost of goods sold Beginning inventory Cost of goods produced Available for sale Less: Ending inventory Cost of goods sold Gross margin Less: Selling and administrative costs Variable Fixed Operating income YALE COMPANY Variable Costing Income Statement Prior Year Current Year Sales Less: Cost of goods sold Beginning inventory Cost of goods produced Available for sale Less: Ending inventory Cost of goods sold Add: Variable selling and administrative Contribution margin Less: Fixed manufacturing costs Less: Selling and administrative costs Fixed Operating income YALE COMPANY Reconciling Difference in Operating Income Between Full and Variable Costing Prior Year Current Year Change in inventory in units x fixed overhead rate 0$ Difference in operating income 0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

How is the NDAA used to shape defense policies indirectly?

Answered: 1 week ago

Question

Distinguish between formal and informal reports.

Answered: 1 week ago