Question
7.1.5 Cost of Goods Manufactured, using Variable Costing and Absorption Costing On March 31, the end of the first year of operations, Barnard Inc., manufactured
7.1.5
Cost of Goods Manufactured, using Variable Costing and Absorption Costing
On March 31, the end of the first year of operations, Barnard Inc., manufactured 6,400 units and sold 5,500 units. The following income statement was prepared, based on the variable costing concept:
Barnard Inc. Variable Costing Income Statement For the Year Ended March 31, 20Y1 | ||||
Sales | $1,870,000 | |||
Variable cost of goods sold: | ||||
Variable cost of goods manufactured | $1,043,200 | |||
Inventory, March 31 | (146,700) | |||
Total variable cost of goods sold | (896,500) | |||
Manufacturing margin | $973,500 | |||
Total variable selling and administrative expenses | (225,500) | |||
Contribution margin | $748,000 | |||
Fixed costs: | ||||
Fixed manufacturing costs | $480,000 | |||
Fixed selling and administrative expenses | 148,500 | |||
Total fixed costs | (628,500) | |||
Operating income | $119,500 |
Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept.
Variable costing | $____ |
Absorption costing | $____ |
The operating revenues of the three largest business segments for Time Warner, Inc., for a recent year follow. Each segment includes a number of businesses, examples of which are indicated in parentheses.
Time Warner, Inc. Segment Revenues (in millions) | ||
Turner (cable networks and digital media) | $15,000 | |
Home Box Office (pay television) | 93,900 | |
Warner Bros. (films, television, and videos) | 32,300 |
Assume that the variable costs as a percent of sales for each segment are as follows:
Turner | 26% | |
Home Box Office | 39% | |
Warner Bros. | 31% |
a. Determine the contribution margin and contribution margin ratio for each segment from the information given. When required, round to the nearest whole millionth (for example, round 5,688.7 to 5,689). Round contribution margin ratio to whole percents for each segment from the information given.
Turner | Home Box Office | Warner Bros. | ||||
Revenues | $_____ | $_____ | $_____ | |||
Variable costs | _____ | ____ | _____ | |||
Contribution margin | $_____ | $_____ | $_____ | |||
Contribution margin ratio (as a percent) | %_____ | %_____ | %_____ |
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