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Absorption and Variable Costing Comparisons Red Arrow Blueberries manufactures blueberry jam. Because of bad weather, its blueberry crop was small. The following data have been
Absorption and Variable Costing Comparisons Red Arrow Blueberries manufactures blueberry jam. Because of bad weather, its blueberry crop was small. The following data have been gathered for the summer quarter of last year: (a) Prepare a functional income statement for the quarter using absorption costing. (Round answers to the nearest dollar. Do not use negative signs with your answers, EXCEPT if you calculate a net loss.) (b) Prepare a contribution income statement for the quarter using variable costing. (Do not use negative signs with your answers EXCEPT if you calculate a net loss.) (c) What is the value of ending inventory under absorption costing? (Round answer to the nearest whole number.) $ (d) What is the value of ending inventory under variable costing? $ (e) The difference in the value of ending inventory in parts (c) and (d) is explained by the following difference between absorption and variable costing: variable costing assigns only variable manufacturing costs to products while absorption costing assigns both variable and fixed manufacturing costs to products. variable costing treats all manufacturing costs as variable costs while absorption costing treats only variable manufacturing costs as variable costs. Absorption costing treats fixed costs as period costs while variable costing treats fixed costs as product costs. 4bsorption costing treats all manufacturing costs as period costs while variable costing treats only variable manufacturing costs as period costs. Absorption and Variable Costing Comparisons Red Arrow Blueberries manufactures blueberry jam. Because of bad weather, its blueberry crop was small. The following data have been gathered for the summer quarter of last year: (a) Prepare a functional income statement for the quarter using absorption costing. (Round answers to the nearest dollar. Do not use negative signs with your answers, EXCEPT if you calculate a net loss.) (b) Prepare a contribution income statement for the quarter using variable costing. (Do not use negative signs with your answers EXCEPT if you calculate a net loss.) (c) What is the value of ending inventory under absorption costing? (Round answer to the nearest whole number.) $ (d) What is the value of ending inventory under variable costing? $ (e) The difference in the value of ending inventory in parts (c) and (d) is explained by the following difference between absorption and variable costing: variable costing assigns only variable manufacturing costs to products while absorption costing assigns both variable and fixed manufacturing costs to products. variable costing treats all manufacturing costs as variable costs while absorption costing treats only variable manufacturing costs as variable costs. Absorption costing treats fixed costs as period costs while variable costing treats fixed costs as product costs. 4bsorption costing treats all manufacturing costs as period costs while variable costing treats only variable manufacturing costs as period costs
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