Virgil produces jet bridges for many domestic and international airports. Cost information for Virgils jet bridges is as follows: Click the icon to view the cost information) Additional information for the first three quarters of 2020 for Virgil are shown below: Click the icon to view the additional information for the first three quarters.) Virgil's controller Mel, wishes to analyze the difference in the income statements between throughput costing, absorption costing, and variable costing for the first 3 quarters of 2020. Assume no beginning inventory Read the requirements Requirement 1. Prepare an absorption costing income statement. (Complete all input fields. Enter a 0 for any zero balance accounts. Use a minus sign or parentheses for a net loss. Abbreviation used: DM = direct materials: SG&A = selling general and administrative.) Absorption Costing: Quarter 1 Quarter 2 Quarter 3 Revenues Cost of goods available for sale Net income (loss) Requirement 2. Prepare a variable costing income statement. (Complete all input fields. Enter a O for any zero balance accounts. Use a minus sign or parentheses for a net loss. Variable Costing: Quarter 1 Quarter 2 Quarter 3 Revenues Cost of goods available for sale Net Income (loss) Requirement 3. Prepare a throughput costing income statement. (Complete all input fields. Enter a 0 for any zero balance accounts. Use a minus sign or parentheses for a net loss. Quarter 1 Quarter 2 Quarter 3 Throughput Costing: Revenues Cost of goods available for sale Net Income (loss) Variable costs per jet bridge: Materials $ 5,600 Cost of goods Labor $ 3,100 $ 6.200 $ 1.600 $ 1,300 Manufacturing Overhead Selling General and administrative Fixed costs for the first 3 quarters of 2020: Manufacturing Overhead Selling $ 877,200 allocated based on budgeted production $ 540,000 General and administrative $ 945,000 Net income (los a minus sign or parentheses for a net Requirement 3. loss.) Data table Throughput ce Revenues 1st Quarter 2nd Quarter 3rd Quarter 66 70 68 66 70 68 61 63 59 Budgeted production Actual production Sales Sales price: $37,000 per jet bridge Fixed selling costs by quarter Fixed G&A costs by quarter Cost of goods available 190.000 190,000 160,000 405,000 270,000 270,000 Print Done Net income (loss) Requirement 4. Explain the difference in the net income under each costing method. The V costing method aborbs the most costs into inventory, followed by the costing method, with the costing method absorbing the least amount of costs into inventory. As a result, based on our scenario here where ending inventory is between the three quarters, the costing method results in the highest amount of net income, followed by the costing method, with the costing method resulting in the lowest amount of net income for each of the three quarters. Requirement 5. Based on the information provided, which costing method do you believe Virgil is currently using to calculate the bonus for the production manager? Why? Based on the information provided, Virgil is likely using the costing method to calculate the bonus for the production manager because inventory is each quarter with no credible reason. Using costing will increase net income by the amount of costs absorbed into inventory, thus providing the managers with a higher bonus. Requirement 6. If Q4 sales were 70 and 04 actual and budgeted production was 54, what difference would you expect in Q4 income between absorption costing and variable costing? Why? by units If Q4 sales are 70 and Q4 production is 54, ending inventory would At a fixed manufacturing cost per unit of calculated with absorption costing to be we would expect net income than variable costing Virgil produces jet bridges for many domestic and international airports. Cost information for Virgils jet bridges is as follows: Click the icon to view the cost information) Additional information for the first three quarters of 2020 for Virgil are shown below: Click the icon to view the additional information for the first three quarters.) Virgil's controller Mel, wishes to analyze the difference in the income statements between throughput costing, absorption costing, and variable costing for the first 3 quarters of 2020. Assume no beginning inventory Read the requirements Requirement 1. Prepare an absorption costing income statement. (Complete all input fields. Enter a 0 for any zero balance accounts. Use a minus sign or parentheses for a net loss. Abbreviation used: DM = direct materials: SG&A = selling general and administrative.) Absorption Costing: Quarter 1 Quarter 2 Quarter 3 Revenues Cost of goods available for sale Net income (loss) Requirement 2. Prepare a variable costing income statement. (Complete all input fields. Enter a O for any zero balance accounts. Use a minus sign or parentheses for a net loss. Variable Costing: Quarter 1 Quarter 2 Quarter 3 Revenues Cost of goods available for sale Net Income (loss) Requirement 3. Prepare a throughput costing income statement. (Complete all input fields. Enter a 0 for any zero balance accounts. Use a minus sign or parentheses for a net loss. Quarter 1 Quarter 2 Quarter 3 Throughput Costing: Revenues Cost of goods available for sale Net Income (loss) Variable costs per jet bridge: Materials $ 5,600 Cost of goods Labor $ 3,100 $ 6.200 $ 1.600 $ 1,300 Manufacturing Overhead Selling General and administrative Fixed costs for the first 3 quarters of 2020: Manufacturing Overhead Selling $ 877,200 allocated based on budgeted production $ 540,000 General and administrative $ 945,000 Net income (los a minus sign or parentheses for a net Requirement 3. loss.) Data table Throughput ce Revenues 1st Quarter 2nd Quarter 3rd Quarter 66 70 68 66 70 68 61 63 59 Budgeted production Actual production Sales Sales price: $37,000 per jet bridge Fixed selling costs by quarter Fixed G&A costs by quarter Cost of goods available 190.000 190,000 160,000 405,000 270,000 270,000 Print Done Net income (loss) Requirement 4. Explain the difference in the net income under each costing method. The V costing method aborbs the most costs into inventory, followed by the costing method, with the costing method absorbing the least amount of costs into inventory. As a result, based on our scenario here where ending inventory is between the three quarters, the costing method results in the highest amount of net income, followed by the costing method, with the costing method resulting in the lowest amount of net income for each of the three quarters. Requirement 5. Based on the information provided, which costing method do you believe Virgil is currently using to calculate the bonus for the production manager? Why? Based on the information provided, Virgil is likely using the costing method to calculate the bonus for the production manager because inventory is each quarter with no credible reason. Using costing will increase net income by the amount of costs absorbed into inventory, thus providing the managers with a higher bonus. Requirement 6. If Q4 sales were 70 and 04 actual and budgeted production was 54, what difference would you expect in Q4 income between absorption costing and variable costing? Why? by units If Q4 sales are 70 and Q4 production is 54, ending inventory would At a fixed manufacturing cost per unit of calculated with absorption costing to be we would expect net income than variable costing