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RRKB manufactures snowboards. RRKB began 2020 with an inventory of 310 boards. During the year, it produced 1,400 boards and sold 1,010 for $810
RRKB manufactures snowboards. RRKB began 2020 with an inventory of 310 boards. During the year, it produced 1,400 boards and sold 1,010 for $810 each. Fixed production costs were $266,000, and variable production costs were $250 per unit. Fixed advertising, marketing, and other general and administrative expenses were $114,000, and variable shipping costs were $14 per board. Assume that the cost of each unit in beginning inventory is equal to 2020 inventory cost. RRKB uses a denominator level of 1,400 units. Requirement 1. Prepare an income statement assuming RRKB uses variable costing. Complete the top half of the income statement first, then complete the bottom portion. (Use parentheses or a minus sign for an operating loss.) Revenues 818100 Variable cost of goods sold: Beginning inventory 310 Variable manufacturing costs 252500 Cost of goods available for sale Deduct ending inventory Variable cost of goods sold Variable shipping costs Contribution margin Fixed manufacturing costs 266000 Fixed selling and administrative costs 114000 Operating income (loss) Requirement 2. Prepare an income statement assuming RRKB uses absorption costing. RRKB uses a denominator level of 1,400 units. Production-volume variances are written off to cost of goods sold. Complete the top half of the income statement first, then complete the bottom portion. (Do not round intermediary calculations. Only round the amount you input in the cell to the nearest dollar. Use parentheses or a minus sign for an operating loss.) Revenues Cost of goods sold: Beginning inventory Variable manufacturing costs Allocated fixed manufacturing costs Cost of goods available for sale Deduct ending inventory Cost of goods sold Gross margin Variable shipping costs Fixed selling and administrative costs Operating income (loss) 310 818100 Requirement 3. Compute the breakeven point in units sold assuming RRKB uses (a) Variable costing and (b) Absorption costing. Provide proof of your breakeven calculations. Requirement 3(a). Compute the breakeven point in units under variable costing. (Round your answer up to the next whole number.) Total fixed costs Breakeven point Contribution margin per unit = under variable costing Requirement 3(b). Compute the breakeven point in units under absorption costing. First, select the formula and enter the amounts. Then solve for Q in the next step. (Enter the fixed mfg rate to the nearest cent. Assume "Q" is the breakeven point in units. Abbreviations used: BEP = breakeven point, CM = contribution margin, and Mfg = manufacturing.) Total fixed costs + [ Fixed mfg rate + [ x (Breakeven units x ( Units produced Q )]+CM per unit )] + (Round your answer up to the next whole number.) Q (the breakeven point) under absorption costing is units. BEP under absorption costing = Q (Round your answer up to the next whole number.) Q (the breakeven point) under absorption costing is units. Provide proof of your preceding breakeven calculations. (Round all amounts to the nearest whole dollar.) a. Variable costing. b. Absorption costing. (Round all amounts to the nearest whole dollar.)
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