Need help with answer for Account226. Acct226-2 need before 10PM and Acct226-3 can give me next week monday or tuesday. Thank You
Problem 6-18 Variable Costing Income Statement; Reconciliation [LO2, LO3] During Denton Company's first two years of operations, the company reported absorption costing net operating income as follows: Year 1 Sales (@ $50 per unit) Cost of goods sold (@ $34 per unit) Year 2 $ $ 1,500,000 680,000 480,000 310,000 $ 1,020,000 320,000 Gross margin Selling and administrative expenses* Net operating income 1,000,000 340,000 10,000 $ 140,000 * $3 per unit variable; $250,000 fixed each year. The company's $34 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($350,000 25,000 units) $ 8 10 2 14 Absorption costing unit product cost $ 34 Production and cost data for the two years are given below: Units produced Units sold Year 1 25,000 20,000 Year 2 25,000 30,000 Required: 1. Prepare a variable costing contribution format income statement for each year. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.) Variable Costing Income Statement Year 1 Year 2 $ $ Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses $ $ 2. Reconcile the absorption costing and variable costing net operating income figures for each year. (Loss amounts and amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) $ Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing $ Absorption costing net operating income (loss) $ $ Problem 5-20 Basics of CVP Analysis; Cost Structure [LO1, LO3, LO4, LO5, LO6] Memofax, Inc., produces memory enhancement kits for fax machines. Sales have been very erratic, with some months showing a profit and some months showing a loss. The company's contribution format income statement for the most recent month is given below: Sales (13,000 units at $40 per unit) Variable expenses $ 520,000 312,000 Contribution margin Fixed expenses 208,000 232,000 Net operating loss $ (24,000) Required: 1. Compute the company's CM ratio and its break-even point in both units and dollars. (Omit the "%" and "$" signs in your response.) CM ratio Break-even point in units Break-even point in dollars % $ 2. The sales manager feels that an $6,300 increase in the monthly advertising budget, combined with an intensified effort by the sales staff, will result in a $87,000 increase in monthly sales. If the sales manager is right, what will the revised net operating income or loss? (Use the incremental approach in preparing your answer.) (Omit the "$" sign in your response.) is $ 3. Refer to the original data. The president is convinced that a 10% reduction in the selling price, combined with an increase of $33,000 in the monthly advertising budget, will double unit sales. What will the new contribution format income statement look like if these changes are adopted? (Input all amounts as positive values except losses which should be indicated by minus sign. Omit the "$" sign in your response.) Contribution Income Statement $ $ 4. Refer to the original data. The company's advertising agency thinks that a new package would help sales. The new package being proposed would increase packaging costs by $0.40 per unit. Assuming no other changes, how many units would have to be sold each month to earn a profit of $4,600? (Round your intermediate calculations to 2 decimal places and final answer to the nearest whole number.) Sales units 5. Refer to the original data. By automating, the company could slash its variable expenses in half. However, fixed costs would increase by $120,000 per month. a. Compute the new CM ratio and the new break-even point in both units and dollars. (Do not round intermediate calculations. Round your final answers to the nearest whole number. Omit the "%" and "$" signs in your response.) CM ratio Break-even point in units Break-even point in dollars % $ b. Assume that the company expects to sell 20,500 units next month. Prepare two contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Omit the "$" and "%" signs in your response.) Total Not Automated Per Unit $ Au % $ Total $ $ $ $
