35.00 points company used the variable costing approach vs. the absorption costi

Question

35.00 points company used the variable costing approach vs. the absorption costing report. complete the task. Use the information included in the Excel Simulation and the Excel functions described below to . Cell Reference: Allows you to refer to data from another cell in the worksheet. From the Excel Simulation output the result from cell 83, or 420 in this example. Allows you to use the basic math symbols to perform mathematical functions. You can use the following below, if in a blank cell, 83 was entered, the formuía would c keys: (plus sign to add), (minus sign to functions subtract), (asterisk sign to multiply), and / (forward slash to divide). From the Excel Simulation values from those cells and output the result, or 9,500 in this . SUM function: Allows you to refer to multiple cells and adds all the values. You can add individual cell re below, if in a the other math symbols the result would output an a add the Simulation below, if in a blank cell SUM(B6,87,B8) was entered, the formula would output the result of adding those three separate cells, or 215 in this example in a blank cell SUM(B6 B8)' was entered, the formula would output the same result of adding those cells, except they are expressed as a range in the formula, and the result would be 215 in this example. answer for its function. From the Excel or ranges to utlize this function Paste B 1 u . B-?».-. Alignment Number Conditional Format as Cell Ces Edising Formatting" Table Styles 1 8 8 2

Explanation / Answer

Req 1: Variable costing: In variable costing, the product is valued at variable manufactuirng cost only Therefore, Unit Product cost for one fireplace (135+43+37) =   $ 215 Contribution margin income statement Sales revenue ( 4500 fireplace@420) 1890000 Less: Variable cost variable cost of goods sold(4500 units@215) 967500 variable selling cost (4500 units@45) 202500 Contribution earned 720000 Less: Fixed cost Fixed manufacturing overhead 210000 Fixed selling and admin overhead 190000 Net operating income 320,000 Contribution per unit (selling price - variable cost) (420 -215-45) = $ 160 per unit Number of fireplace to break even (Total fixed cost / contribution per unit ) = (400,000 /160) = 2,500 fireplaces Req 2: Absorption costing Total cost of production Variable manufacturing cost (135+43+37) *5000 units 1075000 Fixed manufacturing overheads 210000 Total cost of production 1,285,000 Cost per unit (1285,000/5000) 257 Income Statement Sales(4500 units@420) 1890000 Cost of goods sold(4500 units@257) 1156500 Gross margin 733500 Less: Selling Admin expense Variable (4500 units@45) 202500 Fixed 190000 Net Operating income 341000

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