# Costing – 1-10

Need Homework help.  Number questions exactly as they appear in the attachment.  Need in Excel. Due date 3/26.

3124t13 Asliig nrnent Print View

Exercise ‘,tg-11 Absarption costing and aver-production L.e, C2
Rourke lnc. reports the following annual cost data for its single prod.rct.

Nomal poduction and sales le€l 80,000 units
Sales grrice \$ 58.00 per un t
Direct materials \$ 11.00
Direct labor \$ 8.S0 per un t
Variable owrhead \$ 13.00 per unl.

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“-l*ix#:ffi#* ** **”*\$1,119,99q;r tqt? __-
lf RouRre increases its production to 120,000 units, while sales rernain at the cunent 80,000 unit lerel, by
how mur:h would the company’s gross margin increase or decrease under absorption costing? Assume the
compan’y has idle capacity to double cunent production. {Round the intermediate calculations to 2
decimal places and your final ans\$rer to the nearesf, dcllar amount. Omit the “\$” sign in your
responsie.)

Gross margin f(ctt G””re.r)fJl \$

Worksheet

Exercistr 19-tI Absorption costng andoyer-
productrcn L.A. C2

€xercrSe 19-g Contribution margin format income sfaternenf L.A. ,a3
Polarix ils a retailer of AWs (all tenain rehicles) and accessories. ,r\n income statement for its Consumer
AW Department for the cunent year follows. ATVs sell, on a\,emge, for \$4,200. Variable selling expenses
are \$270 each. The remaining selling expenses are fixed. Adminislrati\e expenses areTOo/o \ariable and
30o/o fixed. The company does not manufacture its own AWs; it puri)hases them ftom a supptier for \$1,820
each.

POLARIX
lncome Statement-Consumer ATV Department

For Year Ended December 21, 201

1

Sales \$ 6:t0,000
Cost of goods sold ,_l_.,gg

l

Gross margin 3:7,000
Operating expenses

Selling expenses \$ 150,000
Administrati\,e expenses ,y”gg_ ,l::gf:

Net income \$ 1t:i6,600

Required:
1. Prepane an income statement for this cunent year using the (:ontribution margin format. {lnpul all

amounts as positive values except net loss which s*rould br; indicated with a minus sign. Omit

POLARIX
lncome Statement-Consumer ATV Deg rartment

For Year Ended December 31 , ZAll
Sal,esl i –

Varii:tbrle EX ES

Sr*lling expenses f

Arintinistratile expen\$es ?

Cost of goods sold T

#1r

1.

2.

\$o

0

E;s
Fixed expenses

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2. For each AW sold dudng this year, what is the contribution tcwatd cor,rering fixed expenses and that
toward eaming income? {Round your dfl\$rrer to the n€arest dsllar arnounl omit the “\$” \$gn in

Contribution margin per ATV \$
ltew lirri#1

Workshreet r
€xercjse f 9-9 Conlriutron margin format income
statemenl L.O. P3

Exerctise 19-3 Conwrting absorption coslrng lncome to variable cr>slrng rncome L.O. P2
Kenai Kayaking, a manufacturer of kayaks, began operations this y:)ar. During this first year, the company
produced 1,025 kayaks and sold 775. At the cunent year-end, the ,:lompany reported the follodng income
statement information using absorption costing-

Sales f i’5 * \$1,025)
Cost of gs6ds sold (775 x \$475)

Gross nl€rrgin
Selling iand administratir,e expenses

\$ 794,375
368,1 25

426,250
22A,O0A

\$ 206,250

a. Produtction cost perkayak totals \$475, which consists of\$375 in \€riable production cost and \$100 in

fixed production cost-the latteramount is based on \$102,500 of fixed production costs allocated to the
1,025 kayaks produced.

b. The \$i220,tn0 in selling and administrati\,e expense consists of \$95,000 that is vadable and 9125,000
that isi fixed.

Requirerd
I’ Preparre an income statement for the current year under \6ri.rble costing. {lnput all amoun!* as

positive values except net loss which s*rould be indicated v,’ith a mi[us sign. Omit the “\$” sign

KENAI KAYAKING
Variable Costing lncome Statemr:rnt

Sal*; i-

Totial wriable expenses

Contribution margin i –

Total

fixed expenses

Net incorne i –

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4.

Fxercrse ‘,19-6 Conwrting uariable cosfli.rg rncorne fo absorpfibn crcs{rng rhcome L,O. p2, p4
Lyon Fumaces prcpares the income statement under \rariable cotiting for its managerial reports, and it
prepares the income statement under absorption costing for exl,:mal reporting. For its first month of
operations, 400 fumaces were produced and 240 were sold; this lerl 160 fumaces in ending inr,entory. The
income statement information under rariable costing follows.

Sales (240 x \$1,675) g 402,000
Variable production cost (240 x \$625) 150,000
Variable selling and administratirre expenses (240 x 955)

-t::rj_a_.
Contribution margin 238,800
Fixed o\,erhead cost 45,000
Fixed selling and administmti\€ expense

– T:9″t_9 ”
Net income \$ 108,800

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1. Prepare this company’s income statement fior its first month ol’ operations under absorption costing.

(lflpul all amsunts as pasitive val\$es except net loss whic’r sftould he indicated rrith a rninus
sign. Round your intermediate calculatisns and final an\$nrrlrs to whole numbers. Omit the “\$”

LYON FURNACES
Absorption Costing lncome Statement

l;0
Cor:;t of ooods sold i –

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Net income i- :; 0

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5.

Sxercrbe !:9-f 0 Variabte costing and contribution matgin statement L-O. PJ
Down Jackets has three types of costs: jacket cost, factory rent (;ost, and utilities cost. This company
sells its jackets for \$16.5 each. Management has prepared the bllo\Aing estimated cast inbrmation for next
month undertwo difierent sales le\,els.

At 6,000 Jackets At 8,000 Jackets
Jacket cost \$42,000 \$56.000

Requiretl:
1. Compute what the company should expect for total rariable cost if 7,000 jackets are sold next month.

(Hint Use the high-low method to separate jacket and utilitier; costs into their rariable and fixed

Totai lariable costs \$ 0

2. Prepare its contribution margin statement for a monthly sales wlume of 8,000 iackets- {lnput all
amounts as positive valuas excepl net loss which sfiould b€ indicaled nrith a minus sign. Omit

Dovm Jackets
Contribution Margin Statement

Monthly Sales Volume of 8,000 Jackets

Is”r,- \$ o
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Worksheet

Exercise 19-10 Vanable cosling and contribufton
ltrsrgrn sfafemenf t.O. P3

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1i

Prablem f 91fA Variable cosflng mcome sfaferrrenf and conuersrb,
Tones CrlrpPany began operations this y€r, During this first yffir,
and sdd p0,000 units. The absorption costing income statement br

Sales (8q,000 units * \$45 per unit)
Cost of goods sdd

Beginning inwntory
Cost of goods manulactured (100,000 units x \$25 per unit)

Cost o{ good awilable for sale
Endin[ inrentory (20,000 x \$25)

Cost of goods sold

Gross ryargin
Selling gryd administratir,e expenses

Net inceme

A d di ti o nal lnfo rm ati a n

Direct materials \$ 5 Per unit
Direct labor \$ 11 per unit
Variable or,erhead \$ 2 per unit
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Required:
1. Preparq an income staternent for the cornpany under rarfable

value\$ except nst loss which Srould be indicated with a
response.)

TORRES COMPANY
Variable Costing lncorne

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nnpnt Print Mew

fo abso rption cosfihg lnfirrne
company produced 100,000

first year of operations fflows.

\$ 3,600,000

0
2,500,880

2,500,000
500,000

2,000,000

1,600,000
590,000

\$ 1,o1o,o0o

fixed expenses and \$1 .75 per unit in

ting. \$nput a{l amounts as positfve
nus sign. Smit the *\$* sisn in your

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i…,””.,..,.-.,..,..,,,.,,.,….,..,,..”,-…,”,,-“,.,,j

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L.O. P2, P4
units

i.-……’,^.*…*.’*.”.
“**….-*’..:

: 0;
i.”….,-…,,..,…. ….. …,-. …. .-… . . .’- . . .’-. .'”.,’.’:

Total wriable expenses

fixed expenses

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3124113

9-fA Van’a\$le cosrthg rncsme sfatemenf
ion {o a&soryfibn cosfing rncsme L.O,

2A Variable costing incaff e statenwnt and coftve
information applies to the questions displayed below.l

360,000
299,000

rurefit Prirft Meryv

absorptioft casting inconte {t*+s cCIfisecutive year\$ L.0. P2, P4, Ai

,000
,000

y€rs under wriaHe costing. {lnput
be indicated with a minus sign.

I

produces a single prcduct. lts income statement u absorption costing for its first tvto
Hlow.

201 0
\$ 1,066,000 \$

696,000

1

unit) ,0’0O
Cmt of sotrd \$29 per unlt) 6,000

Gross m

Problem
[The

Pourell
years of

Sales

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Prob/eri
and cari

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Fixed

Total

all a
Omit

b.

Selling ad m i nistratiw expen\$es

Net i \$ 61,000 ,000

a. Sales production data for these firct two years ffilow.

Units
Units

2010 2\$fi
34,000 34,000
24,000 44,000

Variablg per unit and total fixed costs are unchanged during 0 and 2011. The company’s \$29
per unit cost consists of the ficllowing-

aterials \$5
I
6

“3
y:

Direct

(\$3+0, 000/34, 000 units )

cost per unit

e. Selling administratiw expenses consist of the dloring.

V selling and administratire (\$2,eS per unit)
201 1

\$ 99,000
245,000Fixed ng and administnatiua

Total ng and administnatire \$ 344,000

ble casting income statement
s*rptian casting incame {tu”v
o.Pa P4,At

Problem 1
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Ass i: g nnrent Pri nt Vi eut

Tr:rtal variable costs

E;t
Fixeld expenses

E;a

E’I

Tcrtill fixed expenses

Net iincomei(loss)

i.. .,. . ..f.. .

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Problem 19-24 Part 2
2. What are the diftrence between the absorption costing incomr) and the \ariable costing income br

these two years. {Negative amounts drould be indicated by a minus sign. Omit the “\$” sign in

POWELL COMPANY
Reconciliation of Variable Costing lncome to Alrsorption Costing lncome

zUA 2Ar

\$0\$

\$0\$

\$36
i:

\$ ’35

::::.:…:::::j

L*arntng *?sie*tsv*’.19-?2 ?r*pare anrj analw an
i**rsm* *tater*ent *si*g absorgti** *asting and
us ing wriabl* *osting.

L* arning **i* *ti,s* : 1 * -? & * *rzv**. irt c*nt * a* **r
,reriabl* costing tc the *bscrpti*n c*st basis.

Variiable costing income

Fixed owrhead in ending inventory

Fixeld owrhead in beginning inrcntory

Absorption costing income 0

a. – . .. ., .. -.., ”
.
“..-.-,

.. . -,.,,. .,-.. ,.. .,., -.

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Fr** Jsrni 1 \$-?A tra\$ ?

9.

Problem 19-44 Variable cosf analysls for a serubes company L.Ct. C2
Winter Giarden is a luxury hotel with 160 suites. hs regular suite rate is \$210 per night per suite. The hotel’s
cost per night is \$135 per suite and consists of the following.

Variable direct labor and materials cost
Fixed cos;t [(\$S,220,000/160 suites) * g0S days]

Total cost per night per suite

ffi:ffiY :S;:t

The hotei manager recei’\ied an ofier to hold the local Bikers’ Club ,annual meeting at the hotel in March,
which is the hotel’s low season with an occupancy rale of under Slii%. The Bikers’ Club would resenre 40
suites fon three nights if the hotel could offer a 55o/” discount, or a ftrle of \$94 per night. The hotel manager
is inclined to reject the oftr because the cost per suite per night is \$135. The manager beliercs that if 40
suites are oftred at the mte of \$4,920 per night for three nights, the hotel would lose \$4,920, computed as
(\$94 – \$X35) x 40 suites x 3 nights.

Requiredr
Prepare an analysis of this offer for the hotel manager. {tnput all amounts as positive values except
Contribution margin which drould be indicated with a minr.ts dgn. Omit the “\$” sign in your
response.)

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IR-*-;ls- \$ o
tv*i”bigffi o
ffitjsffi;

Should ther offer from the Bikers’ Club be accepted or rejected?

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Problem 19-5A lncome reporting, absorption costing, and managerial ethics L.A- Ct , P2
Safety Chemical produces and sells an ice+nelting granular used orr roadways and sidewalks in winter- lt
annually produces and sells about 100tons of its granular. ln its nir,3-year history, the company has nerier
reported a net loss. Howe\,er, because of this yea/s unusually mild rrdnter, projected demand for its product
is only 7) tons. Eased on ifs pedicted prcduction and sales of 70 t<'ns, the company projects the ficllowing income statement (under absorption costing).

Sales (il0 tons at \$21,000 per ton) \$1,470,0:10
Cost of goods sold O0 tons at \$16,000 per ton)

-t:::,?,r:”_.
Gross rnargin 350,0:)0
Sellins and administrati\,e expenses

_ ?l_1:l_..Y
Net losli \$ (21,7,:10)

hs poduct cost information {ollouts and consists main}y offxed cos,[ because ofhs automated production
process requiring expensir,e equipment.

Variabh direct labor and material costs per ton \$ 5,i’14
Fixed c,ost per ton (\$720,000 + 70 tons) ,!i.Y

Total pnoduct cost perton \$ 16,trC0

Selling and administratir,e expenses consist of rariable selling and administratileexpenses of \$310 perton
and fixed selling and administrati\,e expenses of \$350,000 per year. ‘[he company’s president is concemed
about the adr,erse reaction fom its creditors and shareholders if tl’e projected net loss is reported. The
operations manager mentions that since the company has large ritorage capacity, it can report a net
income by keeping its production at the usual 1oGton lewl e\en though it expects to sell only 70 tons. The
president was puzzled by the suggestion that the company can reF,)rt income by pmducing more without
increasing sales.

Required:
1.1 Can the company report a net income by increasing production to 100 tons and storing the excess

production in inrcntory?

E———i”-1
1.2 Prep,are an income statement (using absorption costing) based rn prcduction of ‘100 tons and sales of

70 tons. {lnput all ainounts as positive valurs except net lolis which drould be indicat€d with a

SAFEry CHEMICAL
lncome Statement

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