ttps://newconnect.mheducation.c t.html h 7-Ch 12) 6 Saved Help Save & ExitSubmit
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ttps://newconnect.mheducation.c t.html h 7-Ch 12) 6 Saved Help Save & ExitSubmit Calla Company produces skateboards that sell for $63 per unit. The company currently has the capacity to produce 100,000 skateboards per year, but is selling 80,200 skateboards per year. Annual costs for 80,200 skateboards follow. Direct materials Direct labor overhead selling expenses Administrative expenses Total costs and expenses $ 890,220 705,760 948,000 545,000 471,000 $3,559,980 A new retail store has offered to buy 19,800 of its skateboards for $58 per unit. The store is in a different market from Calla's regular customers and would not affect regular sales. A study of its costs in anticipation of this additional business reveals the following: * Direct materials and direct labor are 100% variable. ·30 percent of overhead is fixed at any production level from 80,200 units to 100,000 units, the remaining 70% of annual overhead costs are variable with respect to volume. Selling expenses are 70% variable with respect to number of units sold, and the other 30% of selling expenses are fixed. There will be an additional $1.10 per unit selling expense for this order Administrative expenses would increase by a $900 fixed amount Reguireda three column conu Prepare a three-column comparative income statement that reports the followingExplanation / Answer
COMPARATIVE INCOME STATEMENTS Normal Volume Additional Volume Combined Total Sales 5052600 1148400 6201000 Costs and expenses: Direct materials 8,90,220 2,19,780 1110000 Direct labor 7,05,760 1,74,240 880000 Overhead 9,48,000 1,63,831 11,11,831 Selling expenses 5,45,000 1,15,966 6,60,966 Administrative expenses 4,71,000 900 4,71,900 Total costs and expenses 35,59,980 6,74,717 4234697 Operating income 14,92,620 4,73,683 1966303
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