Crichton

Original case by Xavier Garcia.

The Australian company Crichton is considering opening a subsidiary in Gratallops (Priorat, Tarragona) in order to facilitate the introduction of its products in our country. It wants to make this introduction to the market in stages, so it will start manufacturing and selling two of its products: Scifi1 and Scifi2. Initially, it will import much of the components of the products needed for the production of its Australian parent company. For analysis purposes, you will need two groups of components that we will call Far and Scape.

The production process is organized in two sections: the section SEC1 where the group of components Far is prepared to leave them ready for the later elaboration and obtaining of the two products, task that does in the section SEC2, where it incorporates the group of components Scape and according to the combination of these, the product Scifi1 or Scifi2 is obtained.

1. Data relating to the movement of the company's inventories.

2. Cost allocation.

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3. Activity on the sections.

The SEC1 section has established as normal activity working a total of 200 hours per period, while the SEC2 section has established its normal activity volume at 160 hours. The actual activity carried out was 150 hours in the SEC1 section and 128 hours in the SEC2 section, of which 96 were for making Scifi1 and 32 for making Scifi2.

To manufacture Scifi1 and Scifi2 products, both need a unit of the semi-finished product in SEC1, but the Scifi2 product uses 2 kg more per unit of Scape components than the Scifi1 product.

4. Sales for the period

During the period analyzed, the units sold by Scifi1 were invoiced at 64 / unit and the units sold by Scifi2 at 187.50 / unit.

Required:

1. Calculate income statement under absorption costing.

2. Calculate income statement under variable costing.

3. Calculate income statement under absorption costing applying the capacity method.

1. Data relating to the movement of the company's inventories. Beginning inventory Raw material Far Raw material Scape Semi-finished product of section SEC1 Finished product Scifi1 Finished product Scifi2 Purchases / Production 1.000 kg a 2/kg 20.000 kg a 3/kg 5.000 unitats 3.000 unitats 1.000 unitats Ending inventory 200 kg 6.000 kg 1.000 unitats 500 unitats 200 unitats 2. Cost allocation. The costs allocated in the different sections of the society, already classified in fixed and variable are those that are synthesized next. Concepts SEC1 SEC2 COMERC. ADMIN. Variables 8.400 12.000 30.000 Fixed 20.000 30.000 50.000 20.000 1. Data relating to the movement of the company's inventories. Beginning inventory Raw material Far Raw material Scape Semi-finished product of section SEC1 Finished product Scifi1 Finished product Scifi2 Purchases / Production 1.000 kg a 2/kg 20.000 kg a 3/kg 5.000 unitats 3.000 unitats 1.000 unitats Ending inventory 200 kg 6.000 kg 1.000 unitats 500 unitats 200 unitats 2. Cost allocation. The costs allocated in the different sections of the society, already classified in fixed and variable are those that are synthesized next. Concepts SEC1 SEC2 COMERC. ADMIN. Variables 8.400 12.000 30.000 Fixed 20.000 30.000 50.000 20.000