The annual data that follows pertain to Rick's Radical Eyewear, a manufacturer of swimming goggles (the company had no beginning inventory) (Click the icon to view the data) Read the requirements Loss $ 18 Requirement 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Rick's Radical Eyewoar for the year. Begin with the conventional (absorption costing) income statement Rick's Radical Eyewear Data Table Income Statement (Absorption Costing) For the Year Ended December 31 Sales price...... $ 47 Variable manufacturing expense per unit Sales commission expense per unit. 12 Fixed manufacturing overhead. $ 2,760,000 Less: Operating expenses Fixed operating expenses.. $ 260,000 Number of goggles produced. 230 000 Number of goggles sold 205,000 Requirements Print Done S Choose from any list or enter any number in the input fields 1. Prepare both conventional (absorption costing) and contribution margin (variable costing) income statements for Rick's Radical Eyewear 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 $165,000 would increase sales to 230,000 goggles Should the company go ahead with the promotion? Give your reason 5 parts remaining Value Strings produces student-grade violins for beginning violin students The company produced 2,500 violins in its first month of operations. At month-end, 750 finished violins remained unsold. There was no inventory in work in process Violins were sold for $122.50 each. Total costs from the month are as follows (Click on the icon to view the data.) The company prepares traditional (absorption costing) income statements for its bankers Value Strings would also like to prepare contribution margin income statements for management use Read the requirements Data Table Compute the following amounts that would be shown on these income statements Requirement 1. Gross profit Direct materials used. $ 125,500 Identify the formula, then compute the gross profit Direct labor. S 50.000 Gross profit Variable manufacturing overhead S 32.000 Fixed manufacturing overhead S 42,500 i Requirements Variable selling and administrative expenses $ 8,000 Fixed selling and administrative expenses .... $ 12, 100 Compute the following amounts that would be shown on these income statements 1. Gross profit Print Done 2. Contribution margin 3. Total expenses shown below the gross profit line 4. Total expenses shown below the contribution margin line 5. Dollar value of ending inventory under absorption costing 6. Dollar value of ending inventory under variable costing 7. Which income statement will have a higher operating income? By how much? Explain Print Done Check Answer Kerri Smith, owner of Flower Petal, operates a local chain of floral shops. Each shop has its own delivery van. Instead of charging a flat delivery fee Smith wants to set the delivery fee based on the distance driven to deliver the flowers Smith wants to separate the fixed and variable portions of her van operating costs so that she has a better idea how delivery distance affects these costs. She has the following data from the past seven months Click the icon to view the data.) Use the high-low method to determine Flower Petal's cost equation for van operating costs. Use your results to predict van operating costs at a volume of 16,000 miles Let's begin by determining the formula that is used to calculate the variable cost (slope) Change in cost Change in volume Variable cost (slope) Now determine the formula that is used to calculate the fixed cost component Total operating cost Total variable cost Fixed cost Use the high low method to determine Flower Potal's operating cost equation (Round the whole dollar) Data Table Month y = X + Miles Driven 16,400 January February. March 17,500 Van Operating costs $5,480 $5,400 $4,950 $5,270 $5,740 $5,440 $4,680 April 15,000 16,100 17.300 15,600 14,500 May June Enter any number in the edit fields and then click Check Answer July 1 part remaining Clear All Print Done