question archive Walsh Company manufactures 30,000 units during July
Walsh Company manufactures 30,000 units during July
Subject:AccountingPrice:3.87 Bought7
Walsh Company manufactures 30,000 units during July. There were no units in inventory on July 1. Informatin on costs and expenses for July is as follows:
|
Total $ |
Number of units |
Unit $ |
|
|
Manufacturing costs |
|||
|
Variable |
660,000 |
30,000 |
22 |
|
Fixed |
300,000 |
30,000 |
10 |
|
960,000 |
|||
|
Selling and Administrative expenses |
|||
|
Variable |
200,000 |
25,000 |
8 |
|
Fixed |
160,000 |
||
|
Total |
360,000 |
Required:
If the company sells 25,000 units at $75 ( units manufactured exceeds units sold), prepar an incme statement for July using:
- Absorption Costing
- Varibale Costing
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Answer:
Production cost per unit
| Absorption Costing | Variable Costing | |
| Variable Manufacturing cost per unit | $22.00 | $22.00 |
| Fixed Manufacturing cost per unit | $10.00 | |
| Product cost per unit | $32.00 | $22.00 |
Requirement A:
Absorption Costing Income Statement
| $ | $ | |
| Sales (25,000 units x $75) | 1,875,000 | |
| Less: Cost of Goods Sold | ||
| Cost of goods manufactured (30,000 units x $32) | 960,000 | |
| Less: Ending inventory (5,000 units x $32) | 160,000 | |
| Total Cost of goods sold | 800,000 | |
| Gross Profit | 1,075,000 | |
| Less: Selling and Administrative expenses | 360,000 | |
| Income from operation | 715,000 |
Requirement B:
Variable Costing Income Statement
| $ | $ | |
| Sales (25,000 units x $75) | 1,875,000 | |
| Less: Variable Cost of Goods Sold | ||
| Variable manufacturing costs (30,000 units x $22) | 660,000 | |
| Less: Ending inventory (5,000 units x $22) | 110,000 | |
| Total Variable Cost of goods sold | 550,000 | |
| Manufacturing Margin | 1,325,000 | |
| Less: Variable selling and administrative expenses | 200,000 | |
| contribution Margin | 1,125,000 | |
| Less: Fixed costs | ||
| Fixed Manufacturing costs | 300,000 | |
| Fixed seliing and administrative expenses | 160,000 | |
| Total Fixed costs | 460,000 | |
| Income from operations | 665,000 |
