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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 Beginning inventory Production Sales Ending inventory 2019 1000 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 (91.000) (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 (2,067.000 (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 $ 53 $ 53 $ 53 Unit product cost using variable costing Unit product cost using absorption costing $ 91 $ 93 91 Prepare variable and absorption costing income statements for 2020 and 2021. Assume that sales price remains constant across all years. (Round answers to desimal places, eg: 5,275) Income Statement-Absorption Costing 2020 2021 Sales Variable costs - production Gross margin Fixed manufacturing costs Fixed selling costs Operating Income $ Income Statement-Variable Costing 2020 2021 Sales $ Variable costs-production Variable costs-selling Gross margin Fied manufacturing costs Fixed selling costs Operating Income $Step by Step Solution
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