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Can I recieve help on this? Sarah Allen, CEO of Blossom Industries, is concerned about the recent volatility in the company's operating income. She believes
Can I recieve help on this?
Sarah Allen, CEO of Blossom Industries, is concerned about the recent volatility in the company's operating income. She believes that since the number of units sold has been fairly stable over the past three years that operating income also should have been stable. Sarah asked Jason Young, Blossom's inventory manager, to help her understand the issue. Jason reviewed the company's records and compiled the following changes to Finished Goods Inventory (in units) for the years 2019,2020, and 2021. Year 2019 Beginning inventory Production Sales Ending inventory 1,000 40,000 (39,000) 2,000 2020 2,000 38,000 (39.500) 500 2021 500 40,000 (39.500) 1.000 Jason also gathered the 2019 income statements prepared using absorption costing and variable costing, which follow. Income Statement-Absorption Costing Sales $ 4,290,000 Cost of goods sold Units in beginning inventory (91,000) Units sold from current year production (3,458.000) Total cost of goods sold (3,549,000) Gross margin 741,000 Selling expense (605,000) Operating Income $ 136,000 . Income Statement-Variable Costing Sales Variable production expenses Variable selling expenses $ 4.290,000 (2,067.000) (234,000) Total cost of goods sold Gross margin Selling expense Operating Income (3,549.000) 741,000 (605,000) 136,000 $ $ Income Statement-Variable Costing Sales Variable production expenses Variable selling expenses Contribution margin Fixed manufacturing expenses Fixed selling expenses Operating income 4.290,000 (2,067,000) (234,000) 1.989,000 (1.520,000) (371.000) 98,000 (a) -- Your answer is partially correct. Compute the unit product cost for 2019, 2020, and 2021 for variable and absorption costing. Assume that variable costs per unit and total fixed costs do not change from one year to the next. (Round answers to 2 decimal places, es. 15.25.) 2019 2020 2021 53 $ 53 $ 53 Unit product cost using variable costing Unit product cost using absorption costing $ 91 $ 91 $ 91Step by Step Solution
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