X 0 Variable costing income statement February 2014 January 2014 $ 2,760,000 March 2014 $ 3,060,000 $ 2,880,000 Revenues Variable costs: Beginning inventory $ $ $ 0 1,000,000 80,000 960,000 80,000 1,016,000 Variable manufacturing costs 1,000,000 (80,000) 1,040,000 (80,000) 1,096,000 (76,000) 920,000 833,750 960,000 870,000 1,020,000 924,375 Cost of goods available for sale Less: Ending inventory Variable cost of goods sold Variable operating costs Total variable costs Contribution margin Fixed costs: Fixed manufacturing costs 1,753,750 1,830,000 1,944,375 1,006,250 1,050,000 1,115,625 460,000 120,000 460,000 120,000 460,000 120,000 Fixed operating costs 580,000 Total fixed costs 580,000 470,000 580,000 535,625 $ 426,250 $ $ Operating income i Absorption costing income statement January 2014 February 2014 March 2014 $ 2,760,000 $ 2.880,000 $ 3,060,000 $ $ $ Revenues Cost of goods sold: Beginning inventory Variable manufacturing costs Allocated fixed manufacturing costs Cost of goods available for sale Less: Ending inventory 0 1,000,000 460,000 116,800 960,000 441,600 116,800 1,016,000 467,360 1,460,000 (116,800) 1,518,400 (116,800) 1,600,160 (110,960) (7,360) F Adj. for production-volume variance 18,400 U 1,343,200 1,420,000 1,481,840 1,416,800 1,460,000 1,578,160 Cost of goods sold Gross margin Operating costs: Variable operating costs 833,750 120,000 870,000 120,000 924,375 120,000 Fixed operating costs Total operating costs 953,750 990,000 1,044,375 533,785 $ 463,050 $ 470,000 $ Operating income Crystal Clear Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2014 are as follows: E: (Click the icon to view the actual data.) The selling price per unit is $2,400. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,250 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. Requirement 1. Prepare income statements for Crystal Clear in January, February, and March 2014 under throughput costing. (Enter a "0" for any zer accounts.) January 2014 February 2014 March 2014 Revenues Operating income Requirement 2. Contrast the results in requirement 1 with the operating income results under variable costing and absorption costing. In January, V has the lowest operating income, whereas in March V has the highest operating income. puts greater emphasis on sales as the source of operating income than does either Requirement 3. Give one motivation for Crystal Clear to adopt throughput costing. costing puts a penalty on production without a corresponding sale in the same period. Costs other than direct materials that are variat respect to production are in the period of incurrence, whereas under variable costing they would be As a result, provides less incentive to produce for inventory than either X 0 Variable costing income statement February 2014 January 2014 $ 2,760,000 March 2014 $ 3,060,000 $ 2,880,000 Revenues Variable costs: Beginning inventory $ $ $ 0 1,000,000 80,000 960,000 80,000 1,016,000 Variable manufacturing costs 1,000,000 (80,000) 1,040,000 (80,000) 1,096,000 (76,000) 920,000 833,750 960,000 870,000 1,020,000 924,375 Cost of goods available for sale Less: Ending inventory Variable cost of goods sold Variable operating costs Total variable costs Contribution margin Fixed costs: Fixed manufacturing costs 1,753,750 1,830,000 1,944,375 1,006,250 1,050,000 1,115,625 460,000 120,000 460,000 120,000 460,000 120,000 Fixed operating costs 580,000 Total fixed costs 580,000 470,000 580,000 535,625 $ 426,250 $ $ Operating income i Absorption costing income statement January 2014 February 2014 March 2014 $ 2,760,000 $ 2.880,000 $ 3,060,000 $ $ $ Revenues Cost of goods sold: Beginning inventory Variable manufacturing costs Allocated fixed manufacturing costs Cost of goods available for sale Less: Ending inventory 0 1,000,000 460,000 116,800 960,000 441,600 116,800 1,016,000 467,360 1,460,000 (116,800) 1,518,400 (116,800) 1,600,160 (110,960) (7,360) F Adj. for production-volume variance 18,400 U 1,343,200 1,420,000 1,481,840 1,416,800 1,460,000 1,578,160 Cost of goods sold Gross margin Operating costs: Variable operating costs 833,750 120,000 870,000 120,000 924,375 120,000 Fixed operating costs Total operating costs 953,750 990,000 1,044,375 533,785 $ 463,050 $ 470,000 $ Operating income Crystal Clear Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2014 are as follows: E: (Click the icon to view the actual data.) The selling price per unit is $2,400. The budgeted level of production used to calculate the budgeted fixed manufacturing cost per unit is 1,250 units. There are no price, efficiency, or spending variances. Any production-volume variance is written off to cost of goods sold in the month in which it occurs. Requirement 1. Prepare income statements for Crystal Clear in January, February, and March 2014 under throughput costing. (Enter a "0" for any zer accounts.) January 2014 February 2014 March 2014 Revenues Operating income Requirement 2. Contrast the results in requirement 1 with the operating income results under variable costing and absorption costing. In January, V has the lowest operating income, whereas in March V has the highest operating income. puts greater emphasis on sales as the source of operating income than does either Requirement 3. Give one motivation for Crystal Clear to adopt throughput costing. costing puts a penalty on production without a corresponding sale in the same period. Costs other than direct materials that are variat respect to production are in the period of incurrence, whereas under variable costing they would be As a result, provides less incentive to produce for inventory than either