51) Bressler Company sells its products for $33 each. The current production level is 50,000 units, although only 40,000 units are anticipated to be sold.
Unit manufacturing costs are:
Direct materials $6.00
Direct manufacturing labor $9.00
Variable manufacturing costs $4.50
Total fixed manufacturing costs$180,000
Marketing expenses $3.00 per unit, plus $60,000 per year
Required:
a.Prepare an income statement using absorption costing.
b.Prepare an income statement using variable costing.
52) Ireland Corporation planned to be in operation for three years.
?During the first year, 20×1, it had no sales but incurred $240,000 in variable manufacturing expenses and $80,000 in fixed manufacturing expenses.
?In 20×2, it sold half of the finished goods inventory from 20×1 for $200,000 but it had no manufacturing costs.
?In 20×3, it sold the remainder of the inventory for $240,000, had no manufacturing expenses and went out of business.
?Marketing and administrative expenses were fixed and totaled $40,000 each year.
Required:
a.Prepare an income statement for each year using absorption costing.
b.Prepare an income statement for each year using variable costing.
53) Jarvis Golf Company sells a special putter for $20 each. In March, it sold 28,000 putters while manufacturing 30,000. There was no beginning inventory on March 1. Production information for March was:
Direct manufacturing labor per unit15 minutes
Fixed selling and administrative costs$ 40,000
Fixed manufacturing overhead132,000
Direct materials cost per unit2
Direct manufacturing labor per hour24
Variable manufacturing overhead per unit4
Variable selling expenses per unit2
Required:
a.Compute the cost per unit under both absorption and variable costing.
b.Compute the ending inventories under both absorption and variable costing.
c.Compute operating income under both absorption and variable costing.
54) Johnson Realty bought a 2,000-acre island for $10,000,000 and divided it into 200 equal size lots.
As the lots are sold, they are cleared at an average cost of $5,000.
Storm drains and driveways are installed at an average cost of $8,000 per site.
Sales commissions are 10% of selling price.
Administrative costs are $850,000 per year.
The average selling price was $160,000 per lot during 20X5 when 50 lots were sold.
During 20X6, the company bought another 2,000-acre island and developed it exactly the same way. Lot sales in 20X6 totaled 300 with an average selling price of $160,000. All costs were the same as in 20X5.
Required:
Prepare income statements for both years using both absorption and variable costing methods.
55) Moore Company prepared the following absorption-costing income statement for the year ended May 31, 2011.
Sales (8,000 units)$160,000
Cost of goods sold108,000
Gross margin$52,000
Selling and administrative expenses23,000
Operating income$ 29,000
Additional information follows:
Selling and administrative expenses include $1.50 of variable cost per unit sold. There was no beginning inventory, and 8,750 units were produced. Variable manufacturing costs were $11 per unit. Actual fixed costs were equal to budgeted fixed costs.
Required:
Prepare a variable-costing income statement for the same period.
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