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Review Homework-Google Chrome Secure https//www.mathxd.com/Student/Playertlomeworkaspx?homeworkld ACCT 202 Intro to Managerial Acctg Spring 2018 4629968208questionld-1&tflushed; false&ald; 48157238 Review Homework: Chapter 6 core: 4 of 4 pts of 6 E6-40A (book/static) The annual data that follow pertain to Aqua Goggles, a manufacturer of swimming goggles (the company had no beginning inventory): 0 EEB (Click the icon to view the data ) Requirements 1. Prepare both conventional (absorption costing) and contribution margin (van 2. Which statement shows the higher operating income? Why? 3. The company markoting vice president believes a new sales promotion that Data Table ales revenue 8910,000 Sales price 45 Less: Variable expenses Vaiable manudachuring opense per unts 20 Variable cost of goods sold Variable operating expenses S 3,960 000 1,386,000 3,564,000 Sales commission expense per unit Fixed manufacturing overhead Flxed operating expenses Number of gogglas produced Number of goggles sold S 1,980,000 5 250.000 220.000 198 000 Less Fixed expenses Fixed manufacturing overhead Fixed operating expenses 1,980,000 250 1.334 000 Print Done Operating income Requirement 2. Which statement shows the higher operating income? Wihy? Question is complete All parts showing Type here to search Pentium F2 F3 F4 F5 F6 F7 F8 F9 F1O F F12

Explanation / Answer

Absorption costin Unit product cost: Variable manufacturing expense 20 Fixed manufacturing OH (1980000/220,000) 9 Unit Product cost 29 Variable costing Unit Pproduct cost: Variable Manufacturin expense 20 Unit Product cost 20 Income statement under Absorption costing sales revenue (198000 units @45) 8910000 Less: Cost of Goods sold (198000*29) 5742000 Gross Margin 3168000 Less: Operating expense Sales commission (198000*7) 1386000 Fixed operating expense 250000 Net Operating expense 1532000 Income Staement Under Variable cocsting: Sales Revenue (198000*45) 8910000 Less: Vvariable Cost Cost of goods sold (198000 units @20) 3960000 Commission (198000 units @7) 1386000 Contribution 3564000 Less: Fixed cost Fixed mnaufacturing OH 1980000 Fixed operating expense 250000 Net income 1334000 Req b: Income under Absorption cosin will be higher than Variable costing under this case. This is due to that fact the Inventory level at the end of period has been increased. And the fixed OH (@9 [er unit on 22000 units) have been deferred to the next period.

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