During the first month of operations ended May 31, 2016, Frost Point Fridge Comp
ID: 2567721 • Letter: D
Question
During the first month of operations ended May 31, 2016, Frost Point Fridge Company manufactured 40,000 mini refrigerators, of which 36,000 were sold. Operating data for the month are summarized as follows:
Question not attempted.
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Sales
$8,280,000.00
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Manufacturing costs:
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Direct materials
$2,800,000.00
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Direct labor
1,200,000.00
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Variable manufacturing cost
800,000.00
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Fixed manufacturing cost
440,000.00
5,240,000.00
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Selling and administrative expenses:
8
Variable
$540,000.00
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Fixed
216,000.00
756,000.00
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Labels and Amount Descriptions
In CengageNOW, a Label is a text entry that does not have an amount associated with it.
In CengageNOW, an Amount Description is a text entry other than an Account that has an amount associated with it.
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Absorption Costing Income Statement
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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. “Less”, “Plus” or colons (:) will automatically appear if required. If a net loss is incurred, enter that amount as a negative number using a minus sign.
Question not attempted.
Score: 0/66
Frost Point Fridge Company
Absorption Costing Income Statement
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Cost of goods sold:
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Solution
Frost Point Fridge Company
Absorption Costing Income Statement
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Cost of goods sold:
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Points:
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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)
Explanation
none
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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. “Less”, “Plus” or colons (:) will automatically appear if required. If a net loss is incurred, enter that amount as a negative number using a minus sign.
Question not attempted.
Score: 0/102
Frost Point Fridge Company
Variable Costing Income Statement
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Variable cost of goods sold:
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Solution
Frost Point Fridge Company
Variable Costing Income Statement
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Variable cost of goods sold:
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Points:
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Please show the work, thank you!!
1
Sales
$8,280,000.00
2
Manufacturing costs:
3
Direct materials
$2,800,000.00
4
Direct labor
1,200,000.00
5
Variable manufacturing cost
800,000.00
6
Fixed manufacturing cost
440,000.00
5,240,000.00
7
Selling and administrative expenses:
8
Variable
$540,000.00
9
Fixed
216,000.00
756,000.00
Explanation / Answer
1. Income statement based on the absorption costing concept is:
2. Income statement based on the variable costing concept is:
3. Reason for the difference in the amount of income from operations reported in (1) and (2) is because of the fixed manufacturing overhead.
Working:
Frost Point Fridge Company Absorption Costing Income Statement For the Month Ended May 31, 2016 Units Rate Amount ($) Sales 36,000 230.00 8,280,000 Less: Cost of goods sold: Direct Material 36,000 70.00 2,520,000 Direct Labour 36,000 30.00 1,080,000 Variable manufacturing overhead 36,000 20.00 720,000 Annual fixed manufacturing overhead 36,000 11.00 396,000 Gross Profit 3,564,000 Less: Selling and administrative expenses Variable selling and administrative expenses 36,000 15.00 540,000 Fixed selling and administrative expense 216,000 Net operating Profit/loss 2,808,000Related Questions
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