Galaxy Inc, a manufacturer of telescope, began operations on June 1 of the curre

Question

Galaxy Inc, a manufacturer of telescope, began operations on June 1 of the current year. During this time, the computer produced 60,000 units and sold 40,000 units at a sales price of $600 per unit. Cost information for this year is shown in the following table: Given the Galaxy Inc. data, what is net income using variable costing $16,220,000 $17,400,000 $16,360,000 $11.275.000 $16,800,000 Calculate the operating income for May under absorption costing Brush Industries reports the following information for May: $650,000 $325,000 $525,000 $550,000 This product is normally sold for $25 per unit. If Swola increases its production to 200,000 units, while sales remain at the current 75,000 unit level, by how much would the company's gross margin increase or decrease under absorption costing Swola Company reports the following annual cost data for its single product. A. $187,500 increase. $ 112.500 increase. There will be no change in gross margin. SI 12,500 decrease. $ 187,500 decrease.

Explanation / Answer

Galaxy Inc      71 units Produced              60,000 units Sold            40,000 Variable costing income staement Details Per Unit$ Total Amt $ Sales Revenue                  600        24,000,000 Less Variable costs Direct Materials                     90           3,600,000 Direct Labor                     75           3,000,000 Variable mfg OH                       4              160,000 Variable selling & Admin OH                       2                 80,000 Total Variable cost                  171           6,840,000 Contribution Margin                  429        17,160,000 Fixed Costs Fixed Overhead              420,000 Fixed Selling & Admin OH              520,000 Total Fixed OH              940,000 Net Operating Income        16,220,000 So correct option is A        72 Brush Industries Operating Income under Absorption costing for May   Details Amt $ Sales Revenue          900,000 Variable COGS          250,000 Fixed COGS          100,000 Gross Profit          550,000 Less Selling & Admin Cost          225,000 Net Operating Income          325,000 Option B is the answer.      73 Swola   Increase/decrease in Gross Margin Income under absorption costing 75000 units level production 200000 units level prodn Details Per unit Total Amt $ Per unit Total Amt $ Units Sold                 75,000                 75,000 Sales revenue                     25           1,875,000                25           1,875,000 Cost of Godds sold Direct Materials                 1.25                 93,750             1.25                 93,750 Direct Labor                 2.50              187,500             2.50               187,500 Variable Mfg OH                 3.75              281,250             3.75               281,250 Fixed Mfg OH                 4.00              300,000             1.50               112,500 Total Cost of Goods sold              862,500               675,000 Gross Margin           1,012,500           1,200,000 Increase in Gross Margin= $      187,500 So option A is correct.

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