Osawa, Inc., planned and actually manufactured 260,000 units of its single produ

Question

Osawa, Inc., planned and actually manufactured 260,000 units of its single product in2017 , its first year of operation. Variable manufacturing cost was $26 per unit produced. Variable operating (nonmanufacturing) cost was $11 per unit sold. Planned and actual fixed manufacturing costs were $ 520,000. Planned and actual fixed operating (nonmanufacturing) costs totaled $ 370000. Osawa sold 180,000 units of product at $ 44 per unit.

Requirement 1. Osawa 's 2017 operating income using absorption costing is (a) $ 530,000 , (b) $ 370,000 , (c) $ 740,000 , (d) $900,000, or (e) none of these. Show supporting calculations.

Begin by selecting the labels used in the absorption costing calculation of operating income and enter the supporting amounts. (For amounts with a $0 balance, make sure to enter "0" in the appropriate cell.) calculations.

                                   

                                                                                Absorption costing

                                      Revenues

                                   Cost of goods sold

                                   Beginning inventory

                                  Variable manufacturing

                                 Allocated fixed manufacturing

                                  Cost of goods available for sale

                                  Deduct ending inventory

                                Cost of goods sold                                                           

                                 Variable operating

                                Fixed operating

                        

                             Operating costs

                                                        

2.requirement Osawa 's 2017operating income using variable costing is (a) $ 890,000 , (b) $ 530,000 , (c) $ 370,000 , (d) $ 740,000 , or (e) none of these. Show supporting calculations.

variable costing

  

                                  Revenues    

                                   Cost of goods sold

                                   Beginning inventory

                                  Variable manufacturing

                                  Allocated fixed manufacturing

                                  Cost of goods available for sale

                                  Deduct ending inventory

Cost of goods sold                                                            

                                 Variable operating

                                Fixed operating

operating income

Explanation / Answer

Absorption costing net income= 530000

Variable costing net income= 370000

Workings:

Variable costing income statement:

Absorption costing Particulars Total Sales      79,20,000 Cost of goods sold      50,40,000 Gross margin      28,80,000 Expenses Variable operating expenses      19,80,000 Fixed operating expenses        3,70,000 Total non operating expenses      23,50,000 Net income        5,30,000

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