The demand for solvent, one of numerous product e d by his c r opped sharply beneficent con Bests of various new forms, and it is anticipated that the manufacture of a superior product can be started on June 1, one mont acture the new product because only the mature of the wom b e changed t ra product. The company's cherests are currently competing ure No changes w e needed in the present production acties to The controler has been asked by the president of the company for advice on whether to come production during Mayor to wiped the manufacture of solvent June 1. The controleras m ed the RZM industries in Income Statement solvent For the Month Ended Apr 30 $500,000.00 Sales (40.000 units) Cost of goods sold 56.000.00 102.000.00 00000 Los from operations Instructions The production costs and seling and administrative expenses, based on production of 4,000 units in April, are as follows Direct materials Direct labor Variable manufacturing cost Varaseting and administrative expenses Fed manufacturing cost Fored seting and administrative expenses 545 per unit 20 per unit 16 per unit 15 per unit $100,000 for April 42,000 for April be incurred in discontinuing Sales for May are expected to drop about 20% below those of the preceding month No significant changes are anticipated in the feed costs of variatie costs per un No extra cost operations in the portion of the plant associated with solvent. The inventory of solvent at the beginning and end of May is expected to be inconsequential Required: 1. Prepare an estimated income statement in absorption costing form for May for over, assuming that production contres during the month Round amounts to ho decimals 2. Prepare an estimated income statement in variable costing form for May for solvent assuming that production continues during the month Round amounts to decimals" 3. What would be the estimated loss in income from operations if the solve production were temporarily suspended for May? a loss is incurred enter that amount as a negative number using a minus sign 4. Whar advice should the controller give to management? Refer to the sts of Labels and Amount Descriptions for the exact wording of the answer choices for text entries Be sure to complete Labels and Amount Descriptions Labels Cost of goods sold Fixed costs For the Month Ending May 31 May 31 Selling and administrative expenses Variable cost of goods sold Amount Descriptions Contribution margin Contribution margin ratio Direct labor Direct materials Fixed manufacturing cost Fixed selling and administrative expenses Gross profit Income from operations Loss from operations Manufacturing margin Planned contribution margin Sales Labels and Amount Descriptions Amount Descriptions Contribution margin Contribution margin ratio Direct labor Direct materials Fixed manufacturing cost Fixed selling and administrative expenses Gross profit Income from operations Loss from operations Manufacturing margin Planned contribution margin Sales Sales mix Total cost of goods sold Total fixed costs Total selling and administrative expenses Total variable cost of goods sold Variable manufacturing cost Variable selling and administrative expenses Check My Work ng 1 Prepare an estimated income statement in absorption costing form for Mayor Deserpons for the exact wording of the shoes for wome negative number using a minus sign production cours during the month Round wur d e abes and Art n A c e red as a remontas Estimated Income Sun Absorption Cost Svet Label) 2. Prepare an estimated income statement in variable costing form for May for sent assuming production comes dan memon Deserptions for the exact wording of the answer choices for mennes Be sure to the statement Ac c negative number using a nusu Round amount to two de Refer to the isolates and Amour e ored a neos incurred enfermato R industries Estimated income Samen Varvate Costing-Solvent Lab 3 What wou be the estimated loss in income to operations production were oporary for M a lossis incurred er that amount as a negative number ng aming 4 Whal advice should the contro give to management? Temporary uit in an operating loss of compared with an operating loss of productions Production of solvent should be continued. The result would be a savings of
