Question : 147. On January 1 of the current year, Townsend Co. commenced : 1239541

 

147. On January 1 of the current year, Townsend Co. commenced operations. It operated its plant at 100% of capacity during January. The following data summarized the results for January: 

 

Units  

Production

50,000

Sales ($18 per unit)

42,000

Inventory, January 31

  8,000

 

 

Manufacturing costs:

 

   Variable

$575,000

   Fixed

    80,000

      Total

$655,000

 

 

Selling and administrative expenses:

 

   Variable

$ 35,000

   Fixed

   10,500

      Total

$ 45,500

 

 

 

(a)

Prepare an income statement using absorption costing.

(b)

Prepare an income statement using variable costing.

 

 

 

 

 

 

 

 

148. On October 31, the end of the first month of operations, Morristown & Co. prepared the following income statement based on absorption costing: 

Morristown & Co.Absorption Costing Income StatementFor Month Ended October 31, 20-

Sales (2,600 units)

 

$117,000

Cost of goods sold:

 

 

  Cost of goods manufactured

$85,500

 

  Less ending inventory (400 units)

  11,400

 

  Cost of goods sold

 

   74,100

Gross profit

 

$ 42,900

Selling and administrative expenses

 

   21,500

Income from operations

 

$   21,400

 

 

 

 

 

 

If the fixed manufacturing costs were $42,900 and the variable selling and administrative expenses were $14,600, prepare an income statement using variable costing. 

 

 

 

 

 

149. Presented below are the major categories or captions that would appear on an income statement prepared in the variable costing format:Contribution marginFixed costsIncome from operationsManufacturing marginSalesVariable cost of goods soldVariable selling and administrative expenses 

(a)

Arrange the above captions in the proper order in accordance with the variable costing concept.

(b)

Which of the captions represents (1) the difference between sales and the total of all the variable costs and expenses and (2) the remaining amount of revenue available for fixed manufacturing costs, fixed expenses, and net income?

 

 

 

 

 

 

 

 

150. On August 31, the end of the first year of operations, during which 18,000 units were manufactured and 13,500 units were sold, Olympic Inc. prepared the following income statement based on the variable costing concept: 

Olympic Inc.Variable Costing Income StatementFor Year Ended August 31, 20–

Sales

 

$297,000

Variable cost of goods sold:

 

 

  Variable cost of goods manufactured

$288,000

 

  Less ending inventory

    72,000

 

  Variable cost of goods sold

 

  216,000

Manufacturing margin

 

$  81,000

Variable selling and administrative expenses

 

    40,500

Contribution margin

 

$  40,500

Fixed costs:

 

 

  Fixed manufacturing costs

$ 12,000

 

  Fixed selling and administrative expenses

   10,800

    22,800

Income from operations

 

$  17,700

 

 

 

 

 

 

Determine the unit cost of goods manufactured, based on (a) the variable costing concept and (b) the absorption costing concept. 

 

 

 

 

 

 

 

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