Question
BigScreen Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January and February of 2019 are as follows: January
BigScreen Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January and February of 2019 are as follows: January February Unit data Beginning inventory 300 200 Production 900 1200 Sales 1000 1100 Variable costs Direct materials $200 $200 Direct manufacturing labor 250 250 Manufacturing overhead 350 350 Operating (marketing) cost per unit sold 500 500 Fixed costs Manufacturing costs $420,000 $420,000 Operating (marketing) costs 120,000 120,000 The selling price per unit is $2,000. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,000 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. Required: (26%) 1. Prepare income statements for BigScreen in January and February of 2019 under (a) variable costing and (b) absorption costing. 2. Explain the difference in operating income for January and February under variable costing and absorption costing. 3.Compute the companys net income using throughput costing in January and February of 2019.
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