Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

BES Sdn Bhd operates in Changlon, producing a single product. BES has provided the following data concerning the month of May 2021 operation: Item: Selling

BES Sdn Bhd operates in Changlon, producing a single product. BES has provided the following data concerning the month of May 2021 operation:

Item:

Selling price $185

Unit of beginning inventory 600

Unit produced 13,800

Unit sold 14,200

Unit of ending inventory 200

Selling and administrative $75,000

Manufacturing overhead $195,000

Variable cost per unit:

Direct materials $54

Direct labour $64.50

Manufacturing overhead $4.50

Selling and administrative $16.50

Manufacturing overhead $195,000The company produces the same number of units every month, although the sales in units vary from month to month. The variable costs per unit and total fixed costs have been constant from month to month.

REQUIRED:

(a) Compute the unit product cost for the month under Variable Costing.

(b) contribution format income statement for the month using Variable Costing.

(c) Without preparing an income statement, determine the Absorption Costing net operating income for the month. (Hint: Use the reconciliation method.)

(d) WHAT IF ANALYSIS:

(i) Compute the net operating incomes for Variable Costing and Absorption costing, assuming the sales was 13,000 units. (Not need to prepare income statement, may modify the format or data used in (b) and (c) above)

(ii) Compute the net operating incomes for Variable Costing and Absorption costing, assuming the sales was 13,800 units. (No need to prepare income statement, may modify the format or data used in (b) and (c) above)

(e) Construct a table showing the comparisons of the net operating incomes between the two costing methods, for the three different sales figures. [Hint: Compare the net operating incomes derived from Requirement (b), (c), (d)(i) and (d)(ii).

(f) What conclusion can you make based on the comparative table in (e)?

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

Recommended Textbook for

Intermediate Accounting Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy

12th Canadian Edition

1119497043, 978-1119497042

More Books

Students also viewed these Accounting questions

Question

c. What type of degree does it offer?

Answered: 1 week ago

Question

6. How can hidden knowledge guide our actions?

Answered: 1 week ago

Question

7. How can the models we use have a detrimental effect on others?

Answered: 1 week ago