Question
Variable and Absorption CostingService Company Tech Helpers Company prepares a variable costing income statement for internal management and an absorption costing income statement for its
Variable and Absorption CostingService Company Tech Helpers Company prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Tech Helpers provides a personal computer maintenance service that is sold for $100. The variable and fixed cost data are as follows:
Direct labor | $25.00 | |||
Overhead | ||||
Variable cost per unit | $5.00 | |||
Fixed cost (annual) | $240,000 | |||
Marketing, general and administrative | ||||
Variable cost (per service contract completed) | $5.00 | |||
Fixed cost (annual cost) | $20,000 |
During 2019, 4,500 service contracts were started and 5,000 service contracts were completed. At the beginning of 2019, Tech Helpers had 500 service contracts in process at a per-unit cost of $90 in beginning work-in-process inventory.
a. Calculate reported income for management. Do not use negative signs with any answers.
Absorption Costing Income Statement | ||||
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Sales | Answer
| |||
Cost of Goods Sold: | ||||
Beginning Inventory | Answer
| |||
Variable Costs | Answer
| |||
Fixed Costs | Answer
| |||
Less: Ending Inventory | Answer
| |||
Cost of Goods Sold | Answer
| |||
AnswerContribution marginGross profitLess: Ending inventorySelling expenseOverhead cost
| Answer
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AnswerContribution marginGross profitLess: Ending inventorySelling expenseOverhead cost
| Answer
| |||
Administrative expense | Answer
| |||
Net Income | Answer
|
b. Calculate reported income for the bank. Do not use negative signs with any answers.
Variable Costing Income Statement | |||||
---|---|---|---|---|---|
Sales | Answer
| ||||
Cost of Goods Sold: | |||||
Beginning Inventory | Answer
| ||||
Variable Costs | Answer
| ||||
AnswerContribution marginGross profitLess: Ending inventoryOverhead costVariableselling expense
| Answer
| ||||
Variable cost of goods sold | Answer
| ||||
AnswerContribution marginGross profitLess: Ending inventoryOverhead costVariable selling expense
| Answer
| ||||
AnswerContribution marginGross profitLess: Ending inventoryOverhead costVariableselling expense
| Answer
| ||||
Fixed costs: | |||||
AnswerContribution marginGross profitLess: Ending inventoryOverhead costVariableselling expense
| Answer
| ||||
Administrative Expense | Answer
| ||||
Total Fixed Cost | Answer
| ||||
Net Income | Answer
|
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