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prabably best to leave e) knc.mt Davry Untversity week 4: Hem! epark (rale x y @ Do Homework , Krystal Do. sched: Absorption and van M {47,925 Lrread) . krystakk × e secure https://www nati con Student Play Her ne ork.aspx horren d 4 6 8 4 et rid & s ed ek is o ti ates e mens noe ho t te 5143961&back DoAssignments.aspxeview homework Managerial Accounting- 11200 Krystal Donaldson / 9/26/18 11:0 Homework: Week 4 Homework (graded) score: 0 of 6 pts HW Score: 25 60%, 12 85 of 6-38A (similar to) Qiestlon Help Woodwcrth Induslries manufactures and sells a single product The controller has prepared the following income statemer for theRequirements mosl recent year 1. Will the company's cperating income wnder variable cming be hgher, iowar, or the same as iRs operating inccme under (Click the icon to view the data.) absorption cosing? Why? atement 1400 units nd aoe o00 unis during the year ending Decenter 3t Fied manifactuin ovethed 2 Project the cempany's operäling income under variable costng without preparing a vaniable costing inc.ome statcment 3PreDare a viniable costing indome statement fer the year The company produced 14.000 units ard sold 000 units during the year ending December 31. Fxed manufactuing overhead (MOH) for the year was $336,000, while fixed operating expenses were 558,000. The company had no beginning ment 1. Wilf the company's operating income under variable costing be higher, lower. or the same as is operating necome -uncer absorpsio costm? uh Require Woodworth's operating income under varsable costing will be vanable costing. r its operating income under ateaxplion costing. Ths is because snder sesorpbon costing. inme of Click to select your answei(s) ana then click Check Answer 12-22 PM Do liomework -K.... S) kype for Baness margies his for ueb Aindrcol uturExplanation / Answer
Solution 1:
Woodworth operating income under variable costing will be lower than its operating income under absorption costing. This is because under absorption costing some of fixed manufacturing overhead deferred in ending inventory, while under variable costing income statement, all fixed overhead were charged to income statements.
Solution 2:
Operating income under absorption costing = $35,000
Units in ending inventory = Unit produced - Unit sold = 14000 - 9000 = 5000 units
fixed manufacturing overhead deferred in ending inventory under absorption costing = $336,000 / 14000 * 5000 = $120,000
Projected operating income under variable costing = Operating income under absorption costing - Fixed manufacturing overhead deferred in ending inventory
= $35,000 - $120,000 = - $85,000
Solution 3:
Product cost per unit under absorption costing = Cost of goods sold / Nos of unit sold = $486,000 / 9000
= $54 per unit
Variable manufacturing cost = $54 - Fixed overhead cost per unit= $54 - $24 = $30 per unit
Variable operating expenses = $73,000 - $58,000 = $15,000
Woodworth Industries Variable costing income statement For the year ended December 31 Particulars Amount Sales Revenue $594,000.00 Variable cost: Variable manufacturing cost (9000*$30) $270,000.00 Variable operating expenses $15,000.00 Contribution Margin $309,000.00 Fixed Cost: Fixed manufacturing overhead $336,000.00 Fixed operating expenses $58,000.00 Net Operating Income -$85,000.00Related Questions
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