Jackson Company produces plastic that is used for injection-molding applications
ID: 2426123 • Letter: J
Question
Jackson Company produces plastic that is used for injection-molding applications such as gears for small motors. In 2016, the first year of operations, Jackson produced 5,300 tons of plastic and sold 3,975 tons. In 2017, the production and sales results were exactly reversed. In each year, the selling price per ton was $2,400, variable manufacturing costs were 16% of the sales price of units produced, variable selling expenses were 10% of the selling price of units sold, fixed manufacturing costs were $3,551,000, and fixed administrative expenses were $490,000.
a) Prepare income statements for each year using variable costing.
b) Prepare income statements for each year using absorption costing.
Explanation / Answer
a) income statements for each year using variable costing
Less:Period cost
Manufacturing cost 3,551,000 3,551,000
Administrative cost 490,000 4,041,000 490,000 4,041,000
Net operating income 3,018,600 5,371,800
b)income statements for each year using absorption costing
Net operating income 3,906,350 4,484,050
Production cost per year 2016=384+$3,551,000/5300=384+570=1,054
Production cost per year 2017=384+$3,551,000/3975=384+893.33=1277.33
pariculars 2016 2016 2017 2017 Sales 9,540,000 12,720,000 Less:variable cost of goods sold Beginning inventor(1,325*384) Nil 508,800 Variable cost of goods manufactured ($384 per unit) 2,035,200 1,526,400 Variable cost of goods available for sale 2,035,200 2,035,200 Closing inventory(1,325*384) 508,000 1,526,400 Nil 2,035,200 Gross contribution margin 8,013,600 10,684,800 Less variable selling expenses($240 per unit) 954,000 1,272,000 7,059,600 9,412,800Related Questions
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