Compute the indirect production cost allocated to each product with the ABC syst

Question

Compute the indirect production cost allocated to each product with the ABC system s. (20 pts) A company had the following data (in $1,000s) for 2016. None $400 330 20 40 Beginning and ending inventory Direct material used Direct labor Supplies Utilities-variable portion Utilities-fixed portion Indirect labor-Variable portion Indirect labor-fixed portion Depreciation Property taxes Supervisory salaries In addition to the above, selling expenses were $300,000 (of which $60,000 were variable) and general administrative expenses were $144,000 (of which $23,000 were variable). Sales were $1.8 million. a) Prepare an income statement using the contribution approach b) Prepare an income statement using the absorption approach 90 40 200 20 50 3

Explanation / Answer

A Company Income Statement using the Contribution approach Sales 1800000 Less : Variable cost Direct Material 400000 Direct Labor 330000 Supplies 20000 Utilities-Variable Portion 40000 Indirect Labor-Variable Portion 90000 Variable Selling Expenses 60000 Variable General administrative Expenses 23000 Total Variable cost 963000 Contribution 837000 Less : Fixed Cost Utilities-Fixed Portion 12000 Indirect Labor-Fixed Portion 40000 Depreication 200000 Property Taxes 20000 Supervisory Salaries 50000 Fixed Selling Expenses 240000 Fixed General Administrative expenses 121000 Total Fixed cost 683000 Net Income=Contribution-Fixed cost 154000 Income statement using absorption approach Direct Material 400000 Direct Labor 330000 Supplies 20000 Prime Cost 750000 Utilities Fixed 40000 Variable 12000 Indirect Labour Fixed 90000 Variable 40000 Depreication 200000 Property Taxes 20000 Supervisory salaries 50000 Work Cost =prime cost+above expenses 1202000 Add : General Administrative Expenses 144000 Cost of Production=Work Cost +General administrative expenses 1346000 Add : Selling Expenses 300000 Cost of sales=Cost of Production + Selling Expenses 1646000 Profit 154000 Sales 1800000

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.