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Variable and Absorption Costing Summarized data for the first year of operations for Gorman Products, Inc., are as follows: Sales ( 7 5 , 0
Variable and Absorption Costing Summarized data for the first year of operations for Gorman Products, Inc., are as follows: Sales units $ Production costs units Direct material Direct labor Manufacturing overhead: Variable Fixed Operating expenses: Variable Fixed Depreciation on equipment Real estate taxes Personal property taxes inventory & equipment Personnel department expenses a Prepare an income statement based on full absorption costing. Only use a negative sign with your answer for net income loss if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Absorption Costing Income Statement Sales Answer Cost of Goods Sold: Beginning Inventory Answer Direct materials Answer Direct labor Answer Answer Manufacturing overhead Answer Less: Ending Inventory Answer Cost of Goods Sold Answer Answer Gross profit Answer Answer Operating expenses Answer Net Income Loss Answer b Prepare an income statement based on variable costing. Only use a negative sign with your answer for net income loss if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable. Variable Costing Income Statement Sales Answer Variable cost of Goods Sold: Beginning Inventory Answer Direct materials Answer Direct labor Answer Answer Variable manufacturing overhead Answer Less: Ending Inventory Answer Variable cost of goods sold Answer Answer Variable operating expenses Answer Answer Contribution margin Answer Fixed costs: Answer Manufacturing overhead Answer Operating expenses Answer Total Fixed Cost Answer Net Income Loss Answer c Assume that you must decide quickly whether to accept a special onetime order for units for $ per unit. Which income statement presents the most relevant data? Answer variable costing Determine the apparent profit or loss on the special order based solely on these data. Use a negative sign with your answer if the special order creates an apparent loss. Round answer to the nearest whole number. $Answer d If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why? Select the most appropriate statement. Absorption costing approach because the cost should include a reasonable portion of fixed manufacturing costs. Variable costing approach because the cost should include a reasonable portion of fixed manufacturing costs.
Variable and Absorption Costing
Summarized data for the first year of operations for Gorman Products, Inc., are as follows:
Sales units $
Production costs units
Direct material
Direct labor
Manufacturing overhead:
Variable
Fixed
Operating expenses:
Variable
Fixed
Depreciation on equipment
Real estate taxes
Personal property taxes inventory & equipment
Personnel department expenses
a Prepare an income statement based on full absorption costing.
Only use a negative sign with your answer for net income loss if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable.
Absorption Costing Income Statement
Sales Answer
Cost of Goods Sold:
Beginning Inventory Answer
Direct materials Answer
Direct labor Answer
Answer
Manufacturing overhead
Answer
Less: Ending Inventory Answer
Cost of Goods Sold Answer
Answer
Gross profit
Answer
Answer
Operating expenses
Answer
Net Income Loss Answer
b Prepare an income statement based on variable costing.
Only use a negative sign with your answer for net income loss if the answer represents a net loss. Otherwise, do not use negative signs with any answers. Round answers to the nearest whole number, when applicable.
Variable Costing Income Statement
Sales Answer
Variable cost of Goods Sold:
Beginning Inventory Answer
Direct materials Answer
Direct labor Answer
Answer
Variable manufacturing overhead
Answer
Less: Ending Inventory Answer
Variable cost of goods sold Answer
Answer
Variable operating expenses
Answer
Answer
Contribution margin
Answer
Fixed costs:
Answer
Manufacturing overhead
Answer
Operating expenses Answer
Total Fixed Cost Answer
Net Income Loss Answer
c Assume that you must decide quickly whether to accept a special onetime order for units for $ per unit.
Which income statement presents the most relevant data? Answer
variable costing
Determine the apparent profit or loss on the special order based solely on these data.
Use a negative sign with your answer if the special order creates an apparent loss. Round answer to the nearest whole number.
$Answer
d If the ending inventory is destroyed by fire, which costing approach would you use as a basis for filing an insurance claim for the fire loss? Why?
Select the most appropriate statement.
Absorption costing approach because the cost should include a reasonable portion of fixed manufacturing costs.
Variable costing approach because the cost should include a reasonable portion of fixed manufacturing costs.
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