Chapter 6 Question 5

TIL = Homework: Chapter 6 Homework Question 5, E6-40A (simil... Part 1 of 6 HW Score: 31.43%, 1.57 of 5 points O Points: 0 of 1 The annual data that follows pertain to Rays, a manufacturer of swimming goggles (the company had no beginning inventory): E: (Click the icon to view the data.) Read the requirements. Requirement 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Rays for the year. Begin with the conve costing) income statement. Rays Data Table Income Statement (Absorption Costing) For the Year Ended December 31 Sales revenue 1935000 $ 42 ... $ 16 Less: Cost of goods sold Gross profit $ 9 Less: Operating expenses Sales price Variable manufacturing expense per unit Sales commission expense per unit Fixed manufacturing overhead Fixed operating expenses Number of goggles produced Number of goggles sold $ 1,935,000 260,000 Operating income 215,000 200,000 Requirements 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Rays for the year. 2. Which statement shows the higher operating income? Why? 3. The company marketing vice president believes a new sales promotion that costs $150,000 would increase sales to 215,000 goggles. Should the company go ahead with the promotion? Give your reason. TIL = Homework: Chapter 6 Homework Question 5, E6-40A (simil... Part 1 of 6 HW Score: 31.43%, 1.57 of 5 points O Points: 0 of 1 The annual data that follows pertain to Rays, a manufacturer of swimming goggles (the company had no beginning inventory): E: (Click the icon to view the data.) Read the requirements. Requirement 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Rays for the year. Begin with the conve costing) income statement. Rays Data Table Income Statement (Absorption Costing) For the Year Ended December 31 Sales revenue 1935000 $ 42 ... $ 16 Less: Cost of goods sold Gross profit $ 9 Less: Operating expenses Sales price Variable manufacturing expense per unit Sales commission expense per unit Fixed manufacturing overhead Fixed operating expenses Number of goggles produced Number of goggles sold $ 1,935,000 260,000 Operating income 215,000 200,000 Requirements 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Rays for the year. 2. Which statement shows the higher operating income? Why? 3. The company marketing vice president believes a new sales promotion that costs $150,000 would increase sales to 215,000 goggles. Should the company go ahead with the promotion? Give your reason