need help solving problem Assignment 19A (15 pts) Question 6 (of 8) 6. 150 point
ID: 2397754 • Letter: N
Question
need help solving problem
Assignment 19A (15 pts) Question 6 (of 8) 6. 150 points value Quick Study 19-4 Absorption costing income statement LO P2 Aces Inc., a manufacturer of tennis rackets, began operations this year The company produced 6200 rackets and sold 5,100. Each racket was sold at a price of $92. Fixed overhead costs are $81,840 and fixed selling and administrative costs are $65,400. The company also reports the following per unit costs for the year ariable production costs 25.20 220 Variable selling and administrative expenses Required: Prepare an income statement under absorption costing ACES INC. Absorption Costing Income Statement Sales $469,200 ss: Cost of goods sold Variable production costs 128,520 Cost of goods sold Gross margi Selling general and administrative expenses 128,520 340 680 Fixed selling and administrative costs 65 400 Total fixed expenses Net income (loss) 65,400 $ 193,440Explanation / Answer
Explanation
(1) Sales are obtained by multiplying with 5100 units sold. But variable production cost is to be multiplied with 6200 units produced.
(2) There is ending inventory = 6200 - 5100 = 1100. Value of these units = 238080 * 1100 / 6200 = 42240 this is deducted from production cost to get cost of goods sold.
(3) Sales - cost of goods sold = gross margin
(4) Variable Selling, general and admin expenses are multiplied with number of units sold. Fixed selling and admin expenses are treated as period cost hence charged in full.
Sales 469200 (-) Cost of goods sold Variable production cost 156240 Fixed Overhead cost 81840 Ending Inventory -42240 Cost of goods sold 280320 Gross margin 188880 Selling general and adm Variable selling and adm 11220 fixed selling and adm 65400 Total Operating cost 76620 Net Income 112260Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.