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Game Play manufactures video games that it sells for $44 each. The company uses a fixed manufacturing overhead allocation rate of $5 per game. Assume
Game Play manufactures video games that it sells for $44 each. The company uses a fixed manufacturing overhead allocation rate of $5 per game. Assume all costs and production levels are exactly as planned. The following data are from Game Play's first in business (Click the icon to view the data.) Read the requirements Requirements Requirement 1. Compute the product cost per game produced under absorption costing and under variable costing. October November Variable Absorption Variable costing costing $ 22 $ 17 Absorption costing $ 22 $ costing Total product cost per game 17 Requirement 2a. Prepare monthly income statements for October and November, including columns for each month and a total column, using absorption costing. 1. Compute the product cost per game produced under absorption costing and under variable costing. 2. Prepare monthly income statements for October and November, including columns for each month and a total column, using these costing methods: a. absorption costing b. variable costing. 3. Is operating income higher under absorption costing or variable costing in October? In November? Explain the pattern of differences in operating income based on absorption costing versus variable costing. 4. Determine the balance in Finished Goods Inventory on October 31 and November 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income Explain the differences in inventory balances based on absorption costing versus variable costing. Game Play Total Absorption Costing Income Statement October November $ 74,800 $ 132,000 $ 8500 15000 Net Sales Revenue 206,800 Cost of Goods Sold 23500 Gross Profit 8500 15000 23500 Data Table Selling and Administrative Costs 55000 Fint Done Operating Income October November Sales 3,000 units 1,700 units 2,500 units 2,500 units $ 17 $ 17 Production Variable manufacturing cost per game Sales commission cost per game Total fixed manufacturing overhead Total fixed selling and administrative costs 5 5 12,500 12,500 11,000 11,000 Help Me Solve This DemoDocs Example Get More Help Clear All Final
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