Canada Brewers Ltd. has just created a new division to manufacture and sell sing
ID: 2421643 • Letter: C
Question
Canada Brewers Ltd. has just created a new division to manufacture and sell single-cup coffee makers under licence from a major single-cup coffee producer. The facility is highly automated and so has high monthly fixed costs, as shown in the following schedule of budgeted monthly costs. This schedule was prepared based on an expectation of a monthly production volume of 1,650 units.
1. Prepare an income statement under absorption costing
2. Prepare an income statement under variable cosing.
3.
Beginning with absorption costing, reconcile the absorption costing and variable costing income figures for the month.
Canada Brewers Ltd. has just created a new division to manufacture and sell single-cup coffee makers under licence from a major single-cup coffee producer. The facility is highly automated and so has high monthly fixed costs, as shown in the following schedule of budgeted monthly costs. This schedule was prepared based on an expectation of a monthly production volume of 1,650 units.
During August, the following activity was recorded:Explanation / Answer
Solution:
Income Statement under sbsotption costing Sales - 1300* $ 60 78,000 Less: Cost of goods sold Direct material 18,150 Direct labor 14,850 Variable overhead 8,250 41,250 Fixed overhead 34,650 34,650 Total 75,900 Less: Ending ivnentory - 75,900*350/1650 16,100 Less: Selling and administrative costs Variable overhead 3,900 Cost of goods sold 63,700 Net income 14,300Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.