Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I want the answer in details please, and I have an issue with scenario 2 is the answer 85,000 or 79,000 in absorption coating method?

I want the answer in details please, and I have an issue with scenario 2 is the answer 85,000 or 79,000 in absorption coating method? image text in transcribed
Impact of Absorption Costing and Variable Costing on Profit Question: The following information is for Bullard Company, a producer of clock radios: 10,000 units $25 per unit $ 7 per unit Monthly budgeted production Sales price Variable manufacturing cost per unit Direct materials-$4 Direct labour - $1 Manufacturing overhead-$2 Fixed manufacturing cost $40,000 each month, $4 per each units for 10,000 units $3 per unit sold $20,000 each month Variable selling & overhead cost Fixed selling & overhead cost Assume Bullard has no beginning goods inventory at the beginning of month 1. We will look at absorption costing versus variable costing for three different scenarios: Requirement: Prepare the income statements for Bullard Company using variable costing and absorption costing according to each scenario and answer the related question to each scenario. SCENARIO-1:10,000 units produced equals 10,000 units sold Question: During month 1, Bullard Company sells all 10,000 units produced during the month. How does operating profit compare using absorption costing and variable costing when the number of units produced equals the number of units sold? SCENARIO-2 12,000 units produced is greater than 9,000 units sold Question: During month 2, Bullard Company produces 12,000 units but sells only 9,000 units. How does operating profit compare using absorption costing and variable costing when the number of units produced is greater than the number of units sold? SCENARIO-3: 8,000 units produced is less than 11,000 units sold Question: During month 3, Bullard Company produces 8,000 units but sells 11,000 units (3,000 units were left over from month 2 and therefore were in inventory at the beginning of month 3). How does operating profit compare using absorption costing and variable costing when the number of units produced is less than the number of units sold

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Audit Management A Complete Guide

Authors: Gerardus Blokdyk

2019 Edition

0655813640, 978-0655813644

More Books

Students also viewed these Accounting questions

Question

=+c. Would you recommend transforming the data? Explain.

Answered: 1 week ago

Question

What are the main objectives of Inventory ?

Answered: 1 week ago

Question

Explain the various inventory management techniques in detail.

Answered: 1 week ago