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Chapter 21 Homework (Application) eBook Cost of Goods Manufactured, using Variable Costing and Absorption Costing On March 31, the end of the first year of operations, Barnard Inc., manufactured 4,900 units and sold 4,200 units. The following income statement was prepared, based on the variable costing concept: Barnard Inc. Variable Costing Income Statement For the Year Ended March 31, 20Y1 Sales $1,554,000 Variable cost of goods sold: Variable cost of goods manufactured $872,200 Inventory, March 31 (124,600) Total variable cost of goods sold (747,600) Manufacturing margin $806,400 Total variable selling and administrative expenses (184,800) Contribution margin $621,600 Fixed costs: Fixed manufacturing costs $396,900 Fixed selling and administrative expenses 126,000 Total fixed costs (522,900) Operating income $98,700 Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept. Variable costing Absorption costing Check My Work Next Assignment Score: 32.04% Save and Exit Submit Assignment for GradingChapter 21 Homework {Application} 3300.; Cost of goods sold $54,200 $25,100 $23,500 ' Selling and administrative expenses 40,700 23,200 23,500 These fixed costs are used to support all three product lines and will not change with the elimination of any one product. In addition, you have determined that the effects of inventory may be ignored. The management of the company has deemed the prot performance of the running shoe line as unacceptable. As a result, it has decided to eliminate the running shoe line. Management does not expect to be able to increase sales in the other two lines. Howeven as a result of eliminating the running shoe line, management expects the prots of the company to increase by $3?,100. a. Are management's decision and conclusions correct? Management's decision and conclusion are V . The prot V be improved because the fixed costs used in manufacturing and selling running shoes V be avoided ifthe line is eliminated. Winslow I nc. Variable Costing Income StatementsThree Product Lines For the Year Ended December 31, 201'] Cross Training Shoes Golf Shoes Runnng Shoes 0 b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign. V $ $ $ ' I: I: _ ' a5|: EliI: $ ' I: I: _ V $ $ 35 Fixed costs: ' $ $ $ Total xed costs $ $ 35 Operating income (loss) $ $ $ 1:. Use the report in (b) to determine the profit impact of eliminating the running shoe line, assuming no other changes. If the running shoes line were eliminated, then the contribution margin of the product line would V and the fixed costs V be eliminated. Thus, the prot of the company would actually 7 by $l:| . Management should keep the line and attempt to improve the protability of the product by V prices, V volume, or V costs. Check l-tyWork ( Previous Next ) ' Assignment Score: 32.04% Submit Ass nment for Grading Chapter 21 Homework {Application} 3300.; Variable and Absorption Costing Three Products A Winslow Inc. manufactures and sells three types of shoes. The income statements prepared under the absorption costing method for the three shoes are as follows: Winslow Inc. Product Income StatementsAbsorption Costing For the Year Ended December 31, 20Y1 Cross Training Shoes Golf Shoes Running Shoes Revenues $333,800 $19 3,100 $1 63,000 Cost of goods sold (1?E,200) (94,600) (112,600) Gross prot $152,600 $93,500 $55,400 Selling and administrative expenses (139,300) (?D,900) (92,500) Operating income $22,800 $2?,600 $(3?,100) o In addition, you have determined the following information with respect to allocated xed costs: Cross _ _ _ Golf Runnlng Trainlng Shoes Shoes Shoes Fixed costs: Cost of goods sold $54,200 $25,100 $23,500 Selling and administrative expenses 40,700 23,200 23,500 These fixed costs are used to support all three product lines and will not change with the elimination of any one product. In addition, you have determined that the effects of inventoryr may be ignored. The management of the companyr has deemed the prot performance of the running shoe line as unacceptable. As a result, it has decided to eliminate the running shoe line. Management does not expect to be able to increase sales in the other two lines. However, as a result of eliminating the running shoe line, management expects the profits of the company to increase by 53?,100. a. Are management's decision and conclusions correct? Management's decision and conclusion are v . The prot v be improved because the fixed costs used in manufacturing and selling running shoes V be avoided ifthe line is eliminated. b. Prepare a variable costing income statement for the three products. Enter a net loss as a negative number using a minus sign. Winslow I nc. Ih'aria ble Costing Income StatementsThree Product Lines For the Year Ended December 31, 201'] Cross Training Shoes Gotf Shoes Running Shoes _ lI lI lI Check l-tyWork ( Previous Next ) Assignment Score: 32.04% Submit A55 nment for Grading Chapter 21 Homework {Application} 3300.; Territory and Product Protability Analysis Coast to Coast Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacic Pounder. These surfboards are sold in two regions, East Coast and 1."u'est Coast. Information about the two surfboards is as follows: Atlantic Wave Pacic Founder Sales price $450 $350 Variable cost of goods sold per unit (167) [161) Manufacturing margin per unit $283 $189 Variable selling expense per unit (193) [91) Contribution margin per unit $90 $98 The sales unit volume for the territories and products for the period is as follows: East Coast West Coast 0 Atlantic Wave 2,760 1,380 Pacic Pound er 0 1,380 a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required. Coast to Coast Surfboards Inc. Contribution Margin by Territory