Question
Santana Rey expects sales of Business Solutionss line of computer workstation furniture to equal 300 workstations (at a sales price of $3,600 each) for 2018.
Santana Rey expects sales of Business Solutionss line of computer workstation furniture to equal 300 workstations (at a sales price of $3,600 each) for 2018. The workstations manufacturing costs include the following.
Direct materials | $ | 710 | per unit | ||
Direct labor | $ | 360 | per unit | ||
Variable overhead | $ | 60 | per unit | ||
Fixed overhead | $ | 14,400 | per year | ||
The selling expenses related to these workstations follow.
Variable selling expenses | $ | 40 | per unit | |
Fixed selling expenses | $ | 3,500 | per year | |
Santana is considering how many workstations to produce in 2018. She is confident that she will be able to sell any workstations in her 2018 ending inventory during 2019. However, Santana does not want to overproduce as she does not have sufficient storage space for many more workstations. Required: 1. Complete the following income statements using absorption costing.
2. Complete the following income statements using variable costing.
Production volume 300 320 Cost of goods sold: workstations workstations Direct materials per unit Direct labor per unit Variable overhead per unit Fixed overhead per unit Cost of goods sold per unit Number of workstations sold Total cost of goods sold BUSINESS SOLUTIONS Absorption Costing Income Statements Production volume 300 320 Sales volume- 300 Workstations workstations workstations 0 $ Under absorption costing, can the difference between production volume and sales volume affect the reported net income (loss)? BUSINESS SOLUTIONS Variable Costing Income Statements 300 workstations 320 Production volume (units) workstations 300 300 Sales volume (units) workstations workstations 0 Net income (loss) $ $ 0 Under variable costing, its net income by increasing production? can a company increaseStep by Step Solution
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