During the first month of operations ended August 31, Kodiak Fridgeration Compan
ID: 2545274 • Letter: D
Question
During the first month of operations ended August 31, Kodiak Fridgeration Company manufactured 80,000 mini refrigerators, of which 72,000 were sold. Operating data for the month are summarized as follows:
1
Sales
$10,800,000.00
2
Manufacturing costs:
3
Direct materials
$6,400,000.00
4
Direct labor
1,600,000.00
5
Variable manufacturing cost
1,280,000.00
6
Fixed manufacturing cost
320,000.00
9,600,000.00
7
Selling and administrative expenses:
8
Variable
$1,080,000.00
9
Fixed
180,000.00
1,260,000.00
Labels and Amount Descriptions
Absorption Costing Income Statement
Shaded cells have feedback.
1. Prepare an income statement based on the absorption costing concept. 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.
Score: 64/64
Kodiak Fridgeration Company
Absorption Costing Income Statement
1
2
3
4
5
6
7
8
Points:
16 / 16
Feedback
Check My Work
Sales - (Cost of Goods Manufactured - Ending Inventory*) = Gross Profit; Gross Profit - Selling and Administrative Expenses = Income from Operations.
* (Manufactured Units - Sold Units) x (Total Manufacturing Costs/Manufactured Units)
Variable Costing Income Statement
Shaded cells have feedback.
2. Prepare an income statement based on the variable costing concept. 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.
Score: 95/106
Kodiak Fridgeration Company
Variable Costing Income Statement
1
2
3
4
5
6
7
8
9
10
11
12
13
Points:
22.41 / 25
Feedback
Check My Work
Sales - Variable Cost of Goods Sold* = Manufacturing Margin; Manufacturing Margin - Variable Selling and Administrative Expenses = Contribution Margin; Contribution Margin - (Fixed Manufacturing Costs + Fixed Selling and Administrative Expenses) = Income from Operations.
*Variable Cost of Goods Sold = Variable Cost of Goods Manufactured - [(Manufactured Units - Sold Units) x (Variable Manufacturing Costs/Manufactured Units)]
Final Question
Shaded cells have feedback.
3. Explain the reason for the difference in the amount of income from operations reported in (1) and (2).
The income from operations reported under absorption costing exceeds the income from operations reported under variable costing by the difference between the two, due to fixed manufacturing costs that are deferred to a future month under absorption costing.
Points:
4 / 4
Feedback
Check My Work
Recall that fixed factory overhead costs are considered a period expense under variable costing.
Please fully complete calculations and explain the step by step calculations process.
1
Sales
$10,800,000.00
2
Manufacturing costs:
3
Direct materials
$6,400,000.00
4
Direct labor
1,600,000.00
5
Variable manufacturing cost
1,280,000.00
6
Fixed manufacturing cost
320,000.00
9,600,000.00
7
Selling and administrative expenses:
8
Variable
$1,080,000.00
9
Fixed
180,000.00
1,260,000.00
Explanation / Answer
Answer
Direct materials
6400000
Direct Labor
1600000
Variable manufacturing cost
1280000
Fixed manufacturing cost
320000
Total manufacturing cost
$9600000
Total units manufactured
80000
manufacturing cost per unit
$120
Total manufacturing cost
$9600000
(-) Ending Inventory cost
[8000 units x $120] 960000
Cost of Goods Sold
$8640000
Sales
10800000
Less: Cost of Goods Sold
8640000
Gross Profit
$2160000
Less: Selling & Administrative expenses
Variable
1080000
Fixed
180000
Operating Income
$900000
Sales
10800000
Less: Variable Costs
Direct materials
6400000
Direct labor
1600000
Manufacturing cost
1280000
Selling & administrative cost
1080000
Total variable cost
10360000
Contribution margin
440000
Less: Fixed Cost
Manufacturing cost
320000
Selling & administrative cost
180000
Total Fixed Cost
500000
Operating Income
$(60000)
The income from operations reported under absorption costing exceeds the income from operations reported under variable costing by the difference between the two, due to fixed manufacturing costs that are deferred to a future month under absorption costing.
Fixed factory overhead costs are considered a period expense under variable costing.
Direct materials
6400000
Direct Labor
1600000
Variable manufacturing cost
1280000
Fixed manufacturing cost
320000
Total manufacturing cost
$9600000
Total units manufactured
80000
manufacturing cost per unit
$120
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.