Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results:

Estimated Income Statements, using Absorption and Variable Costing

Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results:

Sales (13,600 x $48) $652,800
Manufacturing costs (13,600 units):
Direct materials 393,040
Direct labor 92,480
Variable factory overhead 43,520
Fixed factory overhead 51,680
Fixed selling and administrative expenses 14,100
Variable selling and administrative expenses 17,000

The company is evaluating a proposal to manufacture 15,200 units instead of 13,600 units, thus creating an Inventory, October 31 of 1,600 units. Manufacturing the additional units will not change sales, unit variable factory overhead costs, total fixed factory overhead cost, or total selling and administrative expenses.

a. 1. Prepare an estimated income statement, comparing operating results if 13,600 and 15,200 units are manufactured in the absorption costing format. If an amount box does not require an entry leave it blank or enter “0”.

Marshall Inc.
Absorption Costing Income Statement
For the Month Ending October 31
13,600 Units Manufactured 15,200 Units Manufactured
$ $
Cost of goods sold:
$ $
$ $
$ $
Income from operations $ $

a. 2. Prepare an estimated income statement, comparing operating results if 13,600 and 15,200 units are manufactured in the variable costing format. If an amount box does not require an entry leave it blank or enter “0”.

Marshall Inc.
Variable Costing Income Statement
For the Month Ending October 31
13,600 Units Manufactured 15,200 Units Manufactured
$ $
Variable cost of goods sold:
$ $
$ $
$ $
$ $
Fixed costs:
$ $
Total fixed costs $ $
$ $

b. What is the reason for the difference in income from operations reported for the two levels of production by the absorption costing income statement?

The increase in income from operations under absorption costing is caused by the allocation of   overhead cost over a   number of units. Thus, the cost of goods sold is  . The difference can also be explained by the amount of   overhead cost included in the   inventory.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

a 1 Marshall Inc Absorption Costing Income Statement For the Month Ending October 31 13600 Units Man... 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_2

Step: 3

blur-text-image_3

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

Financial and Managerial Accounting Using Excel for Success

Authors: James Reeve, Carl S. Warren, Jonathan Duchac

1st edition

1111535221, 1111535223, 9781285400914 , 978-1111993979

More Books

Students also viewed these Accounting questions

Question

What is insolation?

Answered: 1 week ago

Question

Briefly discuss Aristotles approach to dreaming.

Answered: 1 week ago

Question

Describe effectiveness of reading at night?

Answered: 1 week ago

Question

find all matrices A (a) A = 13 (b) A + A = 213

Answered: 1 week ago