During the first month of operations ended August 31, Kodiak Fridgeration Compan
ID: 2432964 • Letter: D
Question
During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 40,000 mini refrigerators, of which 36,000 were sold. Operating data for the month are summarized as follows:
1
Sales
$8,280,000.00
2
Manufacturing costs:
3
Direct materials
$2,800,000.00
4
Direct labor
1,200,000.00
5
Variable manufacturing cost
800,000.00
6
Fixed manufacturing cost
440,000.00
5,240,000.00
7
Selling and administrative expenses:
8
Variable
$540,000.00
9
Fixed
216,000.00
756,000.00
* Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. A colon (:) will automatically appear if required. Enter Inventory, August 31 as a negative number using a minus sign. If a net loss is incurred, enter that amount as a negative number using a minus sign.
1
Sales
$8,280,000.00
2
Manufacturing costs:
3
Direct materials
$2,800,000.00
4
Direct labor
1,200,000.00
5
Variable manufacturing cost
800,000.00
6
Fixed manufacturing cost
440,000.00
5,240,000.00
7
Selling and administrative expenses:
8
Variable
$540,000.00
9
Fixed
216,000.00
756,000.00
Explanation / Answer
1 Absorption costing Product cost Direct material 70 Direct labor 30 Variable manufacturing overhead 20 Fixed manufacturing 11 (440000/40000) Total product cost 131.00 Units produced 40000 Units sold 36,000 0 Income statement Sales revenue 8280000 cost of goods sold Beginning inventory 0 cost of goods manufactured 5240000 Add Goods available for sale 5240000 Ending inventory 524000 Less Cost of goods sold 4716000 Gross profit 3564000 Selling and admin expenses Less Variable marketing and admin expense 540000 Fixed marketing and selling expense 216000 Total Selling and admin expenses 756000 Net operating income 2808000 2 Variable costing Product cost Direct material 70 Direct labor 30 Variable manufacturing overhead 20 Variable manufacturing cost 120 Units manufactured 40000 Units sold 36,000 Income statement Sales revenue 8280000 Less Variable expense Variable manufacturing cost 4320000 (120*36000) Variable selling and admin cost 540000 Total variable expense 4860000 Contribution margin 3420000 Less Fixed cost Fixed manufacturing expense 440000 Fixed Marketing and Admin expense 216000 Total fixed expenses 656000 Net operating income 2764000 3 Net operating income absorption costing 2808000 Less Ending inventory Fixed manufacturing 44000 (11*4000) Net operating income variable costing 2764000
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