Question
I WANT IT WITH FULL DETAILS. CHECH THE NUMBERS ARE DIFFERENT AND THERE IS NO SALE AND THEY WANT IT IN DIFFERENT WAY (LIFO) Fairfax
I WANT IT WITH FULL DETAILS. CHECH THE NUMBERS ARE DIFFERENT AND THERE IS NO SALE AND THEY WANT IT IN DIFFERENT WAY (LIFO)
Fairfax Inc. manufactures a small part that is widely used in various electronic products. Operating results for the first three years of operation are as follows:
Year 1 Year 2 Year 3
Sales 800,000 672,000
CGS 600,000 504,000
Gross margin 200,000 168,000
Selling and admin. Expenses 200,000 184,000
Net operating income (loss) 0 (16,000)
Production and sales data for the three year period were as follows:
Year 1 Year 2 Year 3
Production units 50,000 50,000 45,000
Sales units 50,000 42,000 50,000
Additional information:
1. The company plant is highly automated. Variable manufacturing costs total $3 per unit. The annual fixed manufacturing overhead is $450,000.
2. Variable selling and administrative expenses were $2 per unit sold. Annual fixed selling and administrative expenses totaled $100,000 annually.
3. The above costs stayed constant across the three years and the company uses a LIFO inventory flow assumption.
Required:
1. Complete the traditional income statement above for year 3.
2. Complete the following NOI Reconcile table (show full details of how you calculated the deferred and released amounts for any credit).
Reconciliation report Year 1 Year 2 Year 3
Variable costing NOI
FO deferred in Inventory
FO released from Inventory
Absorption costing NOI 0 (16,000)
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