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The annual data that follow pertain to Goggles 4 U, a manufacturer of swimming goggles. (Goggles 4 U had no beginning inventories.) (Click the
The annual data that follow pertain to Goggles 4 U, a manufacturer of swimming goggles. (Goggles 4 U had no beginning inventories.) (Click the icon to view the data.) Requirements 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Goggles 4 U for the year. 2. Which statement shows the higher operating income? Why? Reconcile the difference between the two statements. 3. Goggles 4 U's marketing vice-president believes a new sales promotion that costs $190,000 would increase sales to 205,000 goggles. Should the company go ahead with the promotion? Give your reason. Operating income Now let's prepare the contribution margin (variable costing) income statement for Goggles 4 U for the year. (For entries with a zero balance, make sure to enter "0" in the appropriate cell.) Goggles 4 U Contribution Margin (Variable Costing) Income Statement For the Year Ended December 31 Sales revenue Variable expenses: Variable cost of goods sold: Fixed expenses: Operating income 8140000 Data Table Sale price Variable manufacturing expense per unit S 44 19 Sales commission expense per unit 8 Fixed manufacturing overhead 1,640,000 Fixed operating expenses 290,000 Number of goggles produced 205,000 Number of goggles sold 185,000 Choose from any list or enter any number in the input fields and then click Check Answer. Print Done The annual data that follow pertain to Goggles 4 U, a manufacturer of swimming goggles. (Goggles 4 U had no beginning inventories.) (Click the icon to view the data.) Requirements 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Goggles 4 U for the year. 2. Which statement shows the higher operating income? Why? Reconcile the difference between the two statements. 3. Goggles 4 U's marketing vice-president believes a new sales promotion that costs $190,000 would increase sales to 205,000 goggles. Should the company go ahead with the promotion? Give your reason. Operating income Now let's prepare the contribution margin (variable costing) income statement for Goggles 4 U for the year. (For entries with a zero balance, make sure to enter "0" in the appropriate cell.) Goggles 4 U Contribution Margin (Variable Costing) Income Statement For the Year Ended December 31 Sales revenue Variable expenses: Variable cost of goods sold: Beginning finished goods inventory Contribution margin Ending finished goods inventory Manufacturing overhead Operating expenses Sales commission expense Sales revenue Variable cost of goods available for sale Variable cost of goods manufactured Variable cost of goods sold Operating income 8140000 Data Table Sale price $ 44 Variable manufacturing expense per unit 19 Sales commission expense per unit 8 Fixed manufacturing overhead 1,640,000 Fixed operating expenses 290,000 Number of goggles produced Number of goggles sold 205,000 185,000 Choose from any list or enter any number in the input fields and then click Check Answer. Print Done ?
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To solve this problem well prepare both the absorption costing and variable costing income statements analyze the differences and then assess the impact of the sales promotion Step 1 Prepare the Incom...Get Instant Access to Expert-Tailored Solutions
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