Can you all show me how to compute each and every part of both Requirements, please? And can you all show me the step by step work, so I can determine what you did to calculate each part of Requirements 1 and 2, please?

E9-23 (similar to), Crystal Clear Corporation manufactures and sells 50-inch television sets and uses standard costing Actual data relating to January, February, and March 2017 are as follows: (Click to view the data.) The selling price per unit is $3,200. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,300 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. Read the requirements i Data Table March 150 1,360 1,385 January February Unit data: Beginning inventory 0 150 Production 1,300 1,275 Sales 1,150 1,275 Variable costs: Manufacturing cost per unit produced 900 $ 900 $ Operating (marketing) cost per unit sold S 625 $ 625 $ Fixed costs: Manufacturing costs $ 533,000 $ 533,000 $ Operating (marketing) costs $ 120,000 $ 120,000 $ $ 900 625 533,000 120,000 Requirements 1. Prepare income statements for Crystal Clear in January, February, and March 2017 under (a) variable costing and (b) absorption costing. 2. Explain the difference in operating income for January, February, and March under variable costing and absorption costing. Let's first review the difference between variable and absorption costing. 1 Variable Costing Absorption Costing - Method of inventory costing in which all variable manufacturing -Absorption costing is a method of inventory costing in costs (direct and indirect) are included as inventoriable costs which all variable manufacturing costs and all fixed Note that not all variable costs are inventoriable costs. Only manufacturing costs are included as inventoriable costs. variable manufacturing costs are inventoriable. That is, inventory "absorbs" all manufacturing costs. - All fixed manufacturing costs are excluded from inventoriable - Fixed manufacturing costs are inventoriable costs. costs and are instead treated as expenses of the period in which they are incurred. Under both methods: All variable manufacturing costs are inventoriable costs and all nonmanufacturing costs in the value chain (such as research and development and marketing), whether variable or fixed, are period costs and are recorded as expenses when incurred. Requirement 1 (a). Prepare income statements for Crystal Clear in January, February, and March 2017 under variable costing Complete the top half of the income statement for each month first, then complete the bottom portion Another term for a variable costing income statement is a contribution margin income statement. Recall that Contribution Margin = Revenues - Variable Costs. Therefore the top half of the statement will be the revenue and variable cost accounts. Complete the top half of the income statement for each month first. Use these formulas to calculate the amounts for the income statements. Remember that the prior year's ending inventory is the next year's beginning inventory (Enter an amount in each input cell and enter a "O" for any zero balances) Formulas Revenues Variable manufacturing costs Variable operating costs Ending inventory Selling price per unit x Units sold = Variable manufacturing cost per unit x Units produced = Variable operating cost per unit x Units sold = Variable manufacturing cost per unit x Units in ending inventory January 2017 $ 3,680,000 February 2017 $ 4,080,000 March 2017 $ 4,432,000 Revenues Variable cost of goods sold Beginning inventory Variable manufacturing costs Cost of goods available for sale Deduct ending inventory Variable cost of goods sold Variable operating costs Contribution margin 1,170,000 1,170,000 (135,000) $ 135,000 1,147,500 1,282,500 (135,000) 1,035,000 718,750 1,926,250 $ 135,000 1,224.000 1,359,000 (112,500) 1.147,500 796,875 2,135,625 1.246.500 865,625 2.319.875 Now complete the bottom portion of the variable costing income statement. Remember, fixed costs do not change as sales or production change January 2017 $ 3,680,000 February 2017 $ 4,080,000 March 2017 $ 4,432,000 $ 0 Revenues Variable cost of goods sold Beginning inventory Variable manufacturing costs Cost of goods available for sale Deduct ending inventory $ 135,000 1.147,500 135,000 1,224,000 1,170,000 1,170,000 (135,000) 1.282,500 (135,000) 1,359,000 (112,500) 1.147.500 796,875 Variable cost of goods sold Variable operating costs Contribution margin Fixed manufacturing costs Fixed operating costs Operating income 1,035,000 718.750 1.926,250 533,000 120.000 $ 1,273.250 2,135,625 533,000 120.000 $ 1,482,625 1,246,500 865,625 2,319.875 533,000 120,000 5 1,666.875 Requirement 1 (b). Prepare income statements for Crystal Clear in January, February, and March 2017 under absorption costing 1 From our discussion above, we know that absorption costing is a method of inventory costing in which all variable manufacturing costs and all fixed manufacturing costs are included as inventoriable costs. Therefore our cost of goods sold calculation will include fixed manufacturing costs as well as variable. In addition to the typical cost of goods sold formula, the income statement will contain an adjustment for the production-volume variance. This variance occurs when the company produced less than it had budgeted. We are told that the company used a production level of 1,300 televisions to budget its cost. If the company produced less or more than 1,300, we will have a variance (as in February and March). If the company produced at that level (as in January), we will not have a variance Beginning inventory + Cost of goods available for sale - Ending inventory = Cost of goods sold Osts. nerelore our cost or goous solu caic cost of goods sold formula, the income star Before preparing the income statements, we need to calculate the budgeted fixed manufacturing cost per unit. This is the amount of fixed manufacturing costs that we will allocate to each unit produced. Let's calculate the fixed manufacturing cost per unit now. Budgeted fixed Budgeted manufacturing costs ! production $ 533,000 1,300 Budgeted fixed manufacturing cost per unit $ 410 You will need to allocate the budgeted fixed manufacturing costs to the units you produced. Let's do this for each month now: Budgeted fixed manufacturing cost per unit x January $ February $ 410 March 410 410 Units produced 1,300 1,275 1,360 11 Allocated fixed manufacturing costs $ 533,000 522,750 557,600 $ $ II Prepare income statements for Crystal Clear in January, February, and March 2017 under absorption costing Complete the top half of the income statement for each month first Your revenues and variable manufacturing costs will not change from the statement above You will need to compute the ending inventory. Remember, under absorption costing the units in ending inventory will have both fixed and variable costs allocated. The production-volume variance is the difference between the total fixed manufacturing costs and the allocated fixed manufacturing costs. If the allocated fixed costs are less, it is an unfavorable variance If the allocated costs are more. it is a favorable variance. (Enter a "O" for any zero balance accounts. If an account does not have a variance, do not select a label.) 150 Budgeted total manufacturing Units in ending inventory X cost per unit = Ending inventory January 2017 $ 1,310 ? February 2017 $ 1,310 ? March 2017 125 5 1,310 ? hi St. Tour revenues anu van die maruraciung Costs WH TIO Change or une statement above. ending inventory. Remember, under absorption costing the units in ending inventory will have both fixed 11 11 11 150 January 2017 $ 3,680,000 February 2017 $ 4,080,000 March 2017 $ 4,432,000 Revenues Cost of goods sold: Beginning inventory Variable manufacturing costs Allocated fixed manufacturing costs Cost of goods available for sale Deduct ending inventory Adj, for production-volume variance Cost of goods sold Gross margin 1,170,000 533.000 1,703,000 (196,500) $ 196,500 1.147.500 522.750 1,866,750 (196,500) 10.250 1.506,500 2.173,500 $ 196,500 1,224,000 557,600 1.978,100 (163.750) (24,600) 1,680,500 1,789,750 2,642,250 2,399,500 Now complete the income statement by computing the operating income. The variable and fixed operating cost amounts will not change from the amount used in the variable income statement, just the location of the variable operating costs will change. January 2017 $ 3.680,000 February 2017 $ 4,080,000 March 2017 $ 4,432,000 Revenues Cost of goods sold Beginning inventory Variable manufacturing costs Allocated fixed manufacturing costs Cost of goods available for sale Deduct ending inventory Adj. for production-volume variance Cost of goods sold Gross margin Variable operating costs Fixed operating costs Operating income 1,170.000 533,000 1,703,000 (196,500) 196,500 1,224,000 557,600 1,978,100 (163,750) $ 196,500 1.147.500 522,750 1,866,750 (196,500) 10,250 U 1.506,500 2.173,500 718,750 120,000 51,334.750 (24.600) 1.680,500 2,399,500 796,875 120.000 1.789.750 2.642,250 865,625 120.000 $ 1,656,625 $ 1,482,625 Requirement 2. Explain the difference in operating income for January February, and March under variable costing and absorption costing Begin by preparing a numerical reconciliation and explanation of the difference between operating income for each month under variable costing and absorption costing. Referring to the income statements above, we know the main difference between the income statements is that in variable costing all of the fixed costs are expensed, while in absorption costing some of the fixed manufacturing costs are in inventory. Use the formula below and complete the equation for each month. Recall you computed the ending inventory units in a previous step: 150 units for January, 150 units for February, and 125 units for March Determine the number of units in inventory and multiply it by the fixed manufacturing cost per unit (5410). Absorption-costing operating income Jan $ 1,334,750 Variable-costing operating income = $ 1,273 250 = $ Fixed manufacturing costs In ending Inventory 61.500 Fixed manufacturing costs in beginning inventory 0 Now solve each side of the equation to see that the amounts equal. Absorption-costing Variable-costing operating income - Operating income = $ 61.500 Fixed manufacturing costs in ending inventory 61,500 Fixed manufacturing costs in beginning inventory Jan Now enter the amounts for February and March. Remember that the inventory value is computed as the number of units in inventory multiplied by the fixed manufacturing cost per unit (5410). Now enter the amounts for February and March. Remember that the inventory value is computed as the number of units in inventory multiplied by the fixed manufacturing cost per unit (5410). Absorption-costing operating income Feb $ 1,482,625 Mar $ 1,656,625 Variable-costing operating income = $ 1,482,625 = $ 1,666.875 Fixed manufacturing costs in ending inventory 61,500 51.250 Fixed manufacturing costs in beginning inventory 61,500 61,500 AGA 11 to Now solve each side of the equation for each month to see that the amounts equal. (For amounts with a $0 balance, make sure enter "0" in the appropriate cell.) Absorption-costing Variable-costing operating income operating income = Feb $ 0 Mar $ (10.250) Fixed manufacturing costs Fixed manufacturing costs in ending inventory in beginning inventory 0 (10,250) The difference between absorption and variable costing is due solely to moving fixed manufacturing costs into inventories as inventories increase and out of inventories as they decrease