Question
Santana Rey expects sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,800) for 2014. The workstations'
Santana Rey expects sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,800) for 2014. The workstations' manufacturing costs include the following. Direct materials $ 760 per unit Direct labor $ 320 per unit Variable overhead $ 100 per unit Fixed overhead $ 24,000 per year The selling expenses related to these workstations follow. Variable selling expenses $ 30 per unit Fixed selling expenses $ 3,400 per year Santana is considering how many workstations to produce in 2016. She is confident that she will be able to sell any workstations in her 2016 ending inventory during 2017. 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. Note:all the numbers in the images attached were entered by me, I'm not sure of their accuracy. I used different methods to get the numbers between 300 and 320.
1. Complete the following income statements using absorption costing Production volume 300 320 ost of goods sold Direct materials per unit Direct labor per unit Variable overhead per Fixed overhead per unit workstations workstations 760 320 100 24,000 25,180 228,000 S 96.000 30.000 24,000 378,000 S unit Cost of goods sold per unit Number of workstations sold Total cost of goods sold 300 $ 113,400,000 BUSINESS SOLUTIONS Absorption Costing Income Statements Production volume 300 320 Sales v Sales Cost of goods manufactured Cost of goods sold Selling general and administrative expenses Gross margin Under absorption costing, can the difference between production volume and sales volume affect the reported net income (loss)? olume 300 Workstations workstations workstations 0 $Step by Step Solution
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