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how i solve the operating incomes the one i got wrong y, wing year. He reasons that this will boost operating income and satisfy the
how i solve the operating incomes the one i got wrong
y, wing year. He reasons that this will boost operating income and satisfy the company's owner th company is sufficiently profitable. Although the total units manufactured changes, assume that total fixed costs, unit va unit sales price, and the sales levels are the same. Complete questions (1)-(4) that follow. If the answer is zero, enter 1. Use the income statements on the Absorption Statement and Variable Statement to complete the following table fort production level. Then prepare similar income statements at a production level 10,000 units higher and add that informa table. Assume that total fixed costs, unit variable costs, unit sales price, and the sales levels are the same at both produ Original Production Level-Absorption Operating Income Original Production Additional 10,000 Level-Variable Units-Absorption $ 290,000 $430,000 x Additional 10,000 Units-Variable $ 326,000 $ 290,000 2. What is the change in operating income from producing 10,000 additional units under absorption costing? 68,000 3. What is the change in operating income from producing 10,000 additional units under variable costing? 4. What would be your recommendation to the production manager? a. Do not produce the extra 10,000 units. The increase in operating income under absorption costing is due to fixed manufa Instseing held in inventory, and the additinnal Inventory will lead to higher handling, storage, financing, and obsolescence company's sales price per unit is $80, and the number of units in ending inventory is 3,000. The Item Amount Number of units sold 17,000 Variable sales and administrative cost per unit $ 15 Number of units manufactured 20,000 Variable cost of goods manufactured per unit 30 Fixed manufacturing cost per unit $ 12V Feedback Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 Sales $1,360,000 Cost of goods sold: Cost of goods manufactured $840,000 Ending inventory (126,000) Total cost of goods sold (714,000) $646,000 Gross profit Selling and administrative expenses (320,000) $326,000 Operating income Variable Statement Under variable costing, the cost of goods manufactured includes only variable manufacturing costs includes a computation of manufacturing margin. Saxon, Inc. Variable Costing Income Statement For the Year Ended December 31 Step by Step Solution
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