D ezto.mheducation.com/hm.tpx The tollowing intormation applies to the questions

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D ezto.mheducation.com/hm.tpx The tollowing intormation applies to the questions dtsplayed below High Tension Transformers, Inc, manufactures heavy -duty transformers ansformers, Inc., manufactures heavy duty trensformers for electrical swtching stations. The management reports and absorption costing for external reports company uses variable costing for internal to shareholders, creditors, and the government The company has pr The company has provided the following data Inventores Beginning (units) Ending (units) 203 151 151 195 223 Vanable costing net operating income $297200 $275,300 $256,000 The company's fixed manufacturing overhead per unit was constant at $562 for all three years eBook & Resources 2. 10 pont 1.50 points Required: each years absorption costing net operating income (Amounts to be deducted should be indicated with a minus sign.) Reconcliation of Variable Costing and Absorption Costing Net Operating Incor Varlable costing net operating income Add (deduct) fixed manufacturing overhead cost defermed in (released from) Inventony ear 1 29720 Ask me anything

Explanation / Answer

1 Year 1 Year 2 Year 3 Beginning Inventories 203 151 195 Ending inventories 151 195 223 Change in Inventories 52 -44 -28 Reconciliation of variable Costing and Absorption Costing Net Operating Income Year 1 Year 2 Year 3 Variable Costing net Operating Income $297,200 $275,300 $256,000 Add(Deduct) Fixed Manufacturing overhead cost deffered in inventory Under Absorption Costing $        29,224 $       (24,728) $       (15,736) Absorption Costing Net Operating Income $326,424 $250,572 $240,264 *** Year 1 Year 2 Year 3 Fixed Cost Defferred 52*$562 (44)*$562 (28)*$562 2a When the net operating income under Absorption Costing greater than that of Variable costing there will be a increase in the inventories 2b The fixed manufacturing overhead cost deferred or released from inventory during the year 4 ($267600-$244000) = $         23,600 4 Income Statement Product Line Total CD DVD Sales 1094000 324000 770000 Variable Expenses 368400 104400 264000 Contribution Margin 725600 219600 506000 Traceable Fixed Expenses 183000 135000 48000 Common Fixed expenses not Traceable to products 110000 Net Operating Income 432600 2 Total Company Segments Houston Dallas Amount % Amount % Amount % Sales 640000 100% $160,000 100% $480,000 100% Variable Expenses $336,000 53% $48,000 30% $288,000 60% Contribution Margin $304,000 48% $112,000 70% $192,000 40% Traceable Fixed Expenses $134,400 21% $62,400 39% $72,000 15% Office Segement Margin $169,600 27% $49,600 31% $120,000 25% Common Fixed Expenses Not Traceable to Offices 96000 15% Net Operating Income $73,600 12%

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