Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

costing Section C-LONG Answer Questions - Answer any ONE (1 x 6 marks - 6 marks) Q-8: Can someone explain to me what's wrong with

image text in transcribed
costing Section C-LONG Answer Questions - Answer any ONE (1 x 6 marks - 6 marks) Q-8: "Can someone explain to me what's wrong with these statements?" asked Cheri Reynolds, president of Milex Corporation. "They just don't make sense. We sold the same number of units this year as we did last year, yet our profits have tripled! Who messed up the calculations?" The absorption costing income statements to which Ms. Reynolds was referring are shown below: Year 1 Year 2 Sales (40,000 units each year) $1,250,000 $1,250,000 Cost of goods sold. 840.000 720.000 Gross margin 410,000 530,000 Selling and administrative expenses 350.000 350,000 Net operating income. 60.000 $ 180,000 In the first year, the company produced and sold 40,000 units; in the second year, the company again sold 40,000 units, but it increased production to 50,000 units, as shown below: Year 1 Year 2 Production in units .. 40,000 50,000 Sales in units 40,000 40,000 Variable manufacturing cost per unit produced $6 $6 Variable selling and administrative expense per unit sold S2 S2 Fixed manufacturing overhead costs (total). .. $600,000 $600,000 Milex Corporation applies fixed manufacturing overhead costs to its only product on the basis of each year's production. Required: 1. Compute the unit product cost for each year under: a. Absorption costing. b. Variable costing, 2. Prepare a contribution format income statement for each year using variable 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

Step: 3

blur-text-image

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

Health And Safety Environment And Quality Audits

Authors: Stephen Asbury

1st Edition

9780750680264, 978-0750680264

More Books

Students also viewed these Accounting questions

Question

Analyze the impact of labor unions on health care.

Answered: 1 week ago

Question

Assess three motivational theories as they apply to health care.

Answered: 1 week ago

Question

Discuss the history of U.S. labor unions.

Answered: 1 week ago