Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

image text in transcribed

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 Beginning inventory Production Sales Ending inventory 2019 1,000 40,000 (39,000) 2.000 Year 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. $ 4,290,000 Income Statement-Absorption Costing Sales Cost of goods sold Units in beginning inventory Units sold from current year production Total cost of goods sold Gross margin Selling expense Operating Income 191,000) (3,458,000) (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 12,067,000) (234,000 1,989,000 (1,520,000) (371,000) $ 98,000 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, eg 1525) 2019 2020 2021 $ $ $ Unit product cost using variable costing Unit product cost using absorption costing $ $ $ $

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_2

Step: 3

blur-text-image_3

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

Forensic Accounting

Authors: Greg Shields

1st Edition

1727480988, 978-1727480986

More Books

Students also viewed these Accounting questions