Question
The annual data that follows pertain to RaysRays, a manufacturer of swimming goggles (the company had no beginning inventory): LOADING... (Click the icon to view
The annual data that follows pertain to
RaysRays,
a manufacturer of swimming goggles (the company had no beginning inventory):
LOADING...
(Click
the icon to view the data.)
Requirements
| 1. | Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for RaysRays for the year. |
| 2. | Which statement shows the higher operating income? Why? |
| 3. | The company marketing vice president believes a new sales promotion that costs $ 165 comma 000$165,000 would increase sales to 235 comma 000235,000 goggles. Should the company go ahead with the promotion? Give your reason. |
Requirement 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for
RaysRays
for the year. Begin with the conventional (absorption costing) income statement.
| Rays | ||
| Income Statement (Absorption Costing) | ||
| For the Year Ended December 31 | ||
|
|
| |
| Less: |
|
|
|
|
| |
| Less: | Operating expenses |
|
|
|
| |
| Sales price | $48 | |
| Variable manufacturing expense per unit | $18 | |
| Sales commission expense per unit | $13 | |
| Fixed manufacturing overhead | $2,820,000 | |
| Fixed operating expenses | $260,000 | |
| Number of goggles produced | 235,000 | |
| Number of goggles sold | 213,000 | |
The annual data that follows pertain to
RaysRays,
a manufacturer of swimming goggles (the company had no beginning inventory):
LOADING...
(Click
the icon to view the data.)
Requirements
| 1. | Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for RaysRays for the year. |
| 2. | Which statement shows the higher operating income? Why? |
| 3. | The company marketing vice president believes a new sales promotion that costs $ 165 comma 000$165,000 would increase sales to 235 comma 000235,000 goggles. Should the company go ahead with the promotion? Give your reason. |
Requirement 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for
RaysRays
for the year. Begin with the conventional (absorption costing) income statement.
| Rays | ||
| Income Statement (Absorption Costing) | ||
| For the Year Ended December 31 | ||
|
|
| |
| Less: |
|
|
|
|
| |
| Less: | Operating expenses |
|
|
|
| |
| Sales price | $48 | |
| Variable manufacturing expense per unit | $18 | |
| Sales commission expense per unit | $13 | |
| Fixed manufacturing overhead | $2,820,000 | |
| Fixed operating expenses | $260,000 | |
| Number of goggles produced | 235,000 | |
| Number of goggles sold | 213,000 | |
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Challenges In Advanced Management Accounting
Authors: The Open University
1st.0th Edition
B01D8X506Y
