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Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Results for the first three years of operations were as follows (absorption costing basis): Year 1 Year 2 Year 3 Sales $ 832,800 $ 665,600 $ 832,000 Cost of goods sold 603,200 416,000 644,800 Gross margin 228,800 249,600 187,200 Selling and administrative expenses 197,600 187,200 176,800 Net operating income (loss) $ 31,200 $ 62,400 $ 110,400 In the latter part of Year 2, a competitor went out of business and in the process dumped a large number of units on the market. As a result, Starfox's sales dropped by 20% during Year 2 even though production increased during the year. Management had expected sales to remain constant at 52,000 units, the increased production was designed to provide the company with a buffer of protection against unexpected spurts in demand. By the start of Year 3, management could see that it had excess inventory and that spurts in demand were unlikely. To reduce the excessive inventories, Starfax cut back production during Year 3, as shown below: Year 1 Year 2 Year 3 Production in units 62,400 41,600 52,000 41,600 52,000 52,000 Sales in units Additional information about the company follows: a. The company's plant is highly automated. Variable manufacturing expenses (direct materials, direct labor, and variable manufacturing overhead) total only $2.00 per unit, and fixed manufacturing overhead expenses total $499,200 per year. b. A new fixed manufacturing overhead rate is computed each year based on that year's actual fixed manufacturing overhead costs divided by the actual number of units produced. c. Variable selling and administrative expenses were $1 per unit sold in each year. Fixed selling and administrative expenses totaled $141,500 per year. d. The company uses a FIFO inventory flow assumption. (FIFO means first-in first-out. In other words, it assumes that the oldest units in Inventory are sold first.) Starfox's management can't understand why profits doubled during Year 2 when sales dropped by 20% and why a loss was incurred during Year 3 when sales recovered to previous levels. Required: 1. Prepare a variable costing income statement for each year. 2. Refer to the absorption costing income statements above. a. Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed. b. Reconcile the variable costing and absorption costing net operating income figures for each year. 5b. If Lean Production had been used during Year 2 and Year 3, what would the company's net operating income (or loss) have been in each year under absorption costing? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 2B Req 5B Prepare a variable costing income statement for each year. Starfax, Inc. Variable Costing Income Statement Year 1 Year 2 Year 3 Variable expenses Total variable expenses 0 0 0 0 0 Fixed expenses 0 Reg 1 Reg 2A Reg 28 Reg 58 Reconcile the variable costing and absorption costing net operating income figures for each year. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable costing net operating income (loss) Add fixed manufacturing overhead deferred in inventory Deduct fixed manufacturing overhead cost released from inventory Absorption costing net operating income (los) Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Reg 5B If Lean Production had been used during Year 2 and Year 3, what would the company's net operating incom been in each year under absorption costing? Year 1 Year 2 Year 3 Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Reg 58 Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how muc fixed. (Do not round intermediate calculations and round your final answers to 2 decimal places.) Year 1 Year 2 Year 3 Variable manufacturing cost Fixed manufacturing cost Unit product cost $ 0.00 $ 0.00 $ 0.00 each year under absorption costing? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 2B Reg 5B If Lean Production had been used during Year 2 and Year 3, what would the company's net operating income (or los been in each year under absorption costing? Year 1 Year 2 Year 3 Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Results for the first three years of operations were as follows (absorption costing basis): Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating incone (loss) Year 1 $ 832,000 603,200 228,800 197,600 $ 31,200 Year 2 Year 3 $ 665,600 $ 832,000 416,000 644,800 249,600 187,200 187,200 176,800 $ 62,400 $ 110,400 d In the latter part of Year 2, a competitor went out of business and in the process dumped a large number of units on the market. As a result, Starfax's sales dropped by 20% during Year 2 even though production increased during the year. Management had expected sales to remain constant at 52,000 units; the increased production was designed to provide the company with a buffer of protection against unexpected spurts in demand. By the start of Year 3, management could see that it had excess inventory and that spurts in demand were unlikely. To reduce the excessive inventories, Starfax cut back production during Year 3, as shown below: Year 1 Year 2 Year 3 Production in units 52,000 62,400 41,600 52,000 41,600 52,000 Sales in units Additional information about the company follows: a. The company's plant is highly automated. Variable manufacturing expenses (direct materials, direct labor, and variable manufacturing overhead) total only $2.00 per unit, and fixed manufacturing overhead expenses total $499,200 per year. b. A new fixed manufacturing overhead rate is computed each year based on that year's actual fixed manufacturing overhead costs divided by the actual number of units produced. c. Variable selling and administrative expenses were $1 per unit sold in each year. Fixed selling and administrative expenses totaled $141.600 per year. d. The company uses a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first.) d. The company uses a FIFO inventory flow assumption. (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first.) ad Starfax's management can't understand why profits doubled during Year 2 when sales dropped by 20% and why a loss was incurred during Year 3 when sales recovered to previous levels. Required: 1. Prepare a variable costing income statement for each year. 2. Refer to the absorption costing income statements above. a. Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed. b. Reconcile the variable costing and absorption costing net operating income figures for each year. 5b. If Lean Production had been used during Year 2 and Year 3, what would the company's net operating income (or loss) have been in each year under absorption costing? Complete this question by entering your answers in the tabs below. Req1 Reg 2A Req 28 Req 5B Prepare a variable costing income statement for each year. Starfax, Inc. Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 832,000 $ 665,600S 832,000 Variable expenses Variable selling and administrative expenses 52,000 41,600 52,000 > > Prepare a variable costing income statement for each year. Starfax, Inc. Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 832,000 IS $ 665,600 832,000 Variable expenses: Variable selling and administrative expenses 52,000 41,600 52,000 Total variable expenses 52,000 780,000 41,600 624,000 52,000 780,000 Fixed expenses Fixed manufacturing overhead Fixed selling and administrative expenses 499,200 141,600 >> 499,200 141,600 499,200 141,600 Total fixed expenses Net operating income (loss) 640,800 $ 139,200 640,800 $ (16,800) 640,800 139,200 $ (Req Req 2A Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. during Year 3 when sales recovered to prev levers. Required: 1. Prepare a variable costing income statement for each year. 2. Refer to the absorption costing income statements above. a. Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed b. Reconcile the variable costing and absorption costing net operating income figures for each year. 5b. If Lean Production had been used during Year 2 and Year 3, what would the company's net operating income (or loss) have been in each year under absorption costing? Complete this question by entering your answers in the tabs below. Reg 1 Req ZA Reg 2B Reg 58 Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed. (Do not round intermediate calculations and round your final answers to 2 decimal places.) Year 1 Year 2 Year 3 Variable manufacturing cost s 2.00 2.00$ 2.00 Fixed manufacturing cost 9.60 8.00 Unit product cost $ 11.60 10.00 $ 14.00 $ 12.00 $ 5b. If Lean Production had each year under absorption costing? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 2B Reg 5B Reconcile the variable costing and absorption costing net operating income figures for each year. (Enter any losses or deductions as negative value.) Year 2 Year 3 > >> Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Variable costing net operating income (loss) Add fixed manufacturing overhead deferred in inventory Deduct fixed manufacturing overhead cost released from inventory Absorption costing net operating income (1055) x Reg 1 Reg 2A Reg 28 Reg 58 Reconcile the variable costing and absorption costing net operating income figures for each year. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable costing net operating income (loss) Add fixed manufacturing overhead deferred in inventory Deduct fixed manufacturing overhead cost released from inventory Absorption costing net operating income (los) Complete this question by entering your answers in the tabs below. Reg 1 Req 2A Req 2B Reg 5B If Lean Production had been used during Year 2 and Year 3, what would the company's net operating incom been in each year under absorption costing? Year 1 Year 2 Year 3 Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Reg 58 Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how muc fixed. (Do not round intermediate calculations and round your final answers to 2 decimal places.) Year 1 Year 2 Year 3 Variable manufacturing cost Fixed manufacturing cost Unit product cost $ 0.00 $ 0.00 $ 0.00 each year under absorption costing? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Req 2B Reg 5B If Lean Production had been used during Year 2 and Year 3, what would the company's net operating income (or los been in each year under absorption costing? Year 1 Year 2 Year 3 Starfax, Inc., manufactures a small part that is widely used in various electronic products such as home computers. Results for the first three years of operations were as follows (absorption costing basis): Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating incone (loss) Year 1 $ 832,000 603,200 228,800 197,600 $ 31,200 Year 2 Year 3 $ 665,600 $ 832,000 416,000 644,800 249,600 187,200 187,200 176,800 $ 62,400 $ 110,400 d In the latter part of Year 2, a competitor went out of business and in the process dumped a large number of units on the market. As a result, Starfax's sales dropped by 20% during Year 2 even though production increased during the year. Management had expected sales to remain constant at 52,000 units; the increased production was designed to provide the company with a buffer of protection against unexpected spurts in demand. By the start of Year 3, management could see that it had excess inventory and that spurts in demand were unlikely. To reduce the excessive inventories, Starfax cut back production during Year 3, as shown below: Year 1 Year 2 Year 3 Production in units 52,000 62,400 41,600 52,000 41,600 52,000 Sales in units Additional information about the company follows: a. The company's plant is highly automated. Variable manufacturing expenses (direct materials, direct labor, and variable manufacturing overhead) total only $2.00 per unit, and fixed manufacturing overhead expenses total $499,200 per year. b. A new fixed manufacturing overhead rate is computed each year based on that year's actual fixed manufacturing overhead costs divided by the actual number of units produced. c. Variable selling and administrative expenses were $1 per unit sold in each year. Fixed selling and administrative expenses totaled $141.600 per year. d. The company uses a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first.) d. The company uses a FIFO inventory flow assumption. (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first.) ad Starfax's management can't understand why profits doubled during Year 2 when sales dropped by 20% and why a loss was incurred during Year 3 when sales recovered to previous levels. Required: 1. Prepare a variable costing income statement for each year. 2. Refer to the absorption costing income statements above. a. Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed. b. Reconcile the variable costing and absorption costing net operating income figures for each year. 5b. If Lean Production had been used during Year 2 and Year 3, what would the company's net operating income (or loss) have been in each year under absorption costing? Complete this question by entering your answers in the tabs below. Req1 Reg 2A Req 28 Req 5B Prepare a variable costing income statement for each year. Starfax, Inc. Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 832,000 $ 665,600S 832,000 Variable expenses Variable selling and administrative expenses 52,000 41,600 52,000 > > Prepare a variable costing income statement for each year. Starfax, Inc. Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 832,000 IS $ 665,600 832,000 Variable expenses: Variable selling and administrative expenses 52,000 41,600 52,000 Total variable expenses 52,000 780,000 41,600 624,000 52,000 780,000 Fixed expenses Fixed manufacturing overhead Fixed selling and administrative expenses 499,200 141,600 >> 499,200 141,600 499,200 141,600 Total fixed expenses Net operating income (loss) 640,800 $ 139,200 640,800 $ (16,800) 640,800 139,200 $ (Req Req 2A Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. during Year 3 when sales recovered to prev levers. Required: 1. Prepare a variable costing income statement for each year. 2. Refer to the absorption costing income statements above. a. Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed b. Reconcile the variable costing and absorption costing net operating income figures for each year. 5b. If Lean Production had been used during Year 2 and Year 3, what would the company's net operating income (or loss) have been in each year under absorption costing? Complete this question by entering your answers in the tabs below. Reg 1 Req ZA Reg 2B Reg 58 Compute the unit product cost in each year under absorption costing. Show how much of this cost is variable and how much is fixed. (Do not round intermediate calculations and round your final answers to 2 decimal places.) Year 1 Year 2 Year 3 Variable manufacturing cost s 2.00 2.00$ 2.00 Fixed manufacturing cost 9.60 8.00 Unit product cost $ 11.60 10.00 $ 14.00 $ 12.00 $ 5b. If Lean Production had each year under absorption costing? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 2B Reg 5B Reconcile the variable costing and absorption costing net operating income figures for each year. (Enter any losses or deductions as negative value.) Year 2 Year 3 > >> Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Variable costing net operating income (loss) Add fixed manufacturing overhead deferred in inventory Deduct fixed manufacturing overhead cost released from inventory Absorption costing net operating income (1055) x