Accouting

Required: L 1. Prepare a contribution format income statement for each year using variable costing. ales $ 1,043,000 $ 834,400 $ 1,073,000 ' Variable expenses: L Variable cost of good sold 212,000 172,000 212,000 Variable selling and administrative 106,000 86,000 106,000 .Total variable expenses ' 318,000 258,000 313,000 Contribution margin 725,000 576,400 755,000 Fixed expenses: 7 A 7 Fixed selling and administrative 69.800 69,800 69,800 5 Fixed manufacturing overhead 640,000 640,000 640,000 1me xed expenses 709.800 _ 709,800 ' 709,500 9, rating inqome (.055) $ '15,200 $ (133,400) _ 45,200 Check my work 3 Sales dropped by 20% during year 2 due to the entry of several foreign competitors into the market. ElectronPlus had expected sales to remain constant at 53,000 units for the year; production was set at 63,000 units in order to build a buffer against unexpected spurts in demand. By the start of year 3, management could see that spurts in demand were unlikely and that the inventory was excessive. To 10 points work off the excessive inventories, ElectronPlus cut back production during year 3, as shown below: Year 1 Year 2 Year 3 eBook Production in units 53, 000 63, 000 43, 000 Print Sales in units. 53 , 000 43 , 000 53 , 000 References Additional information about the company follows: a. The company's plant is highly automated. Variable manufacturing costs (direct materials, direct labour, and variable manufacturing overhead) total only $4 per unit, and fixed manufacturing overhead costs total $640,000 per year. b. Fixed manufacturing overhead costs are applied to units of product oh the basis of each year's planned production. (That is, a new fixed overhead rate is computed each year). c. Variable selling and administrative expenses are $2 per unit sold. Fixed selling and administrative expenses total $69,800 per year. d. The company uses a FIFO inventory flow assumption.2. Refer to the absorption costing income statements above. 10 points a. Compute the unit product cost in each year under absorption costing. (Show how much of this cost is variable and how much is fixed.) (Round your answer to 2 decimal places.) eBook Print Year 1 Year 2 Year 3 References Variable manufacturing cost $ 4.00 $ 4.00 $ 4.00 Fixed manufacturing cost 12.08 10.16 14.88 Unit product cost $ 16.08 $ 14. 16 $ 18.88Check my work 3 ElectronPlus manufactures and sells a unique electronic part. Operating results for the first three years of activity were as follows (absorption costing basis): 10 points Year 1 Year 2 Year 3 Sales $1, 043, 000 $834, 400 $1, 073, 000 Cost of goods sold: eBook Beginning inventory 273, 000 Print Add: cost of goods manufactured 811 , 000 837 , 000 763, 000 References Goods available for sale 811, 000 837, 000 1, 036, 000 Less: ending inventory 0 273 , 000 168, 000 Cost of goods sold 811, 000 564, 000 868, 000 Gross margin 232, 000 270, 400 205, 000 Selling and administrative 161, 000 expenses 57 , 400 212, 000 Operating income (loss) $ 71, 000 $213 , 000 $ (7, 000) Sales dropped by 20% during year 2 due to the entry of several foreign competitors into the market. ElectronPlus had expected sales to remain constant at 53,000 units for the year; production was set at 63.000 units in order to build a buffer against unexpected spurts in demand. By the start of vear 3