Question
Variable and Absorption Costing-Service Company Rockys Automotive specializes in performing automobile safety checks. After the companys first year of operations, its accountant prepared the following
Variable and Absorption Costing-Service Company Rockys Automotive specializes in performing automobile safety checks. After the companys first year of operations, its accountant prepared the following summarized data report for the safety checks for 2019: Sales (7,000 safetychecks) $700,000 Production costs (7,010 safety checks) Direct labor 490,700 Shop overhead Variable 112,160 Fixed 70,100 Operating expenses Variable 21,030 Fixed 16,000 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 700,000 Cost of Goods Sold: Beginning Inventory Answer 0 Direct labor Answer 490,700 Answer Shop overhead Answer 182,260 Less: Ending Inventory Answer 960 Cost of Goods Sold Answer 672,000 Answer Gross profit Answer 28,000 Answer Operating expenses Answer 37,030 Net Income (Loss) Answer (9,030) 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 700,000 Variable cost of Goods Sold: Beginning Inventory Answer 0 Direct labor Answer 490,700 Answer Variable shop overhead Answer 112,160 Less: Ending Inventory Answer 860 Variable cost of goods sold Answer 602,000 Answer Variable operating expenses Answer 21,030 Answer Contribution margin Answer 76,970 Fixed costs: Answer Shop overhead Answer 70,100 Operating expenses Answer 16,000 Total Fixed Cost Answer 86,100 Net Income (Loss) Answer (9,130) c. Assume that you must decide quickly whether to accept a special one-time order for 20 safety checks on local police cars for $85 per safety check. 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 (20) Feedback Partially correct Marks for this submission: 29.00/30.00.
help me to find answer C please
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started