AF 210

Ch4Worksheets-Raw.xlsx

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EX1-Raw

Compute the Unit Product Cost (UPC) using both Absorption and Variable Costing
Given:	UR (price):	850
	Units in beginning inventory	- 0
	Units produced	250
	Units sold	225
	Units in ending inventory	25
	Variable costs per unit:
Both	Direct materials	100
Both	Direct labor	320
Both	Variable manufacturing overhead	40
Period Cost	Variable selling and administrative	20
	Fixed costs:
Absorption	Fixed manufacturing overhead (FMO)	60,000
Period Cost	Fixed selling and administrative	20,000

LEGEND: FMO: Fixed Manufacturing Overhead COGS: Cost of Goods Sold UPC: Unit Product Cost MFG: Manufacturing NOI: Net Operating Income S&A: Selling & Administrative Expenses UR: Unit Revenue (Price) UVC: Unit Variable Cost TVC: Total Variable Cost CM: Contribution Margin TCM: Total Contribution Margin CM%: Contribution Margin Ratio TFC: Total Fixed Cost BE: Break Even CM = UR-UVC (or Sales-TVC) CM% = CM/UR (or TCM/Sales) BEvol = TFC/CM BErev = TFC/CM% SPECIFIC TO A JOB (completed)----------------------------- Unit FMO = Fixed Mfg Overhead / # Units Deferred FMOabsorption = Unit FMO * Units of Ending Inventory UPC (relative to a completed job) Variable = (Total Direct Materials & Labor + Variable MFG Overhead)/#Units Absorption = (Total Direct Materials & Labor + All MFG Overhead)/#Units COGSabsorption = UPCabsorption * #Units Sold COGSvariable = UPCvariable * #Units Sold Var S&Avariable = Unit Var S&A * #Unit Sold Var Cost NOI = Sales-COGSvariable-Var S&A-Fixd S&A-FMO Absorp Cost NOI = Sales-COGSabsorption-Var S&A-Fixd S&A

EX2-Raw

1	Under absorption costing, how much FMO cost was deffered in last year's ending inventory?
2	Prepare last year's income statement variable costing.
	Explain the difference in net operating income between the two costing methods.
	Given:	Absorption Costing Income Statement
	(from EX1)	Sales	$ 191,250
		Cost of goods sold (COGS)	157,500	(UPCabsorption*#Units Sold)
		Gross margin	33,750
		Selling and administrative expense	24,500	(var Sell&Admin+fixed Sell&Admin)
		Net operating income	$ 9,250
1		Ending Inventory	(from EX1)
		FMO per Unit	(from EX1)
		Deferred FMOabsorption	(Unit FMO * Ending Inventory)
2		Variable Costing Income Statement
		Sales
		Variable Expenses:
		Variable Cost of Goods Sold	(UPCvariable*#Units Sold)
		Variable Selling & Admin Exp		(Unit Var Sell&Admin Exp * Units Sold)
		Contribution Margin
		Fixed Expenses:
		Fixed MFG Overhead	(from EX1)
		Fixed Sell & Admin Exp		(from EX1)
		Net Operating Income
3

EX3-Raw

	Calculate each year’s absorption costing net operating income in the form of a reconciliation report.
Given:		Yr 1	Yr 2	Yr 3	Yr 4
	Inventories
	Beginning (units)	200	170	180
	Ending (units)	170	180	220
	Var Costing Net Op Income	1,080,400	1,032,400	996,400	984,400
	FMO per Unit:	560
a	Did [ending] inventories increase or decrease during Yr 4?
b	How much FMO was deferred or released from Yr 4 Inventory?
		Absorp Net Op Inc - Var Net Op Inc

EX4-Raw

Prepare a Contribution Format Income Statement segmented by product lines.
Given:	Product
	Weedban	Greengrow
Units Produced:	15,000	28,000
Selling price per unit	6.00	7.50
Variable expenses per unit	2.40	5.25
Traceable fixed expenses per year	45,000	21,000
Common Fixed Expenses:	33,000

EX5-Raw

1	Compute the companywide break-even point in dollar sales.				(All FC/CM%)
2	Compute the break-even point in dollar sales for the North region.				(Traceable FC/CM%)
3	Compute the break-even point in dollar sales for the South region.				(Traceable FC/CM%)
	Given:	Total Company	North	South
	Sales	$ 600,000	$ 400,000	$ 200,000
	Variable expenses	360,000	280,000	80,000
	[Total] Contribution margin (TCM)	240,000	120,000	120,000
	Traceable fixed expenses	120,000	60,000	60,000
	Segment margin	120,000	$ 60,000	$ 60,000
	Common fixed expenses	50,000
	Net operating income	$ 70,000.00		NOTE: refer back to Ch2, EX2

EX6-Raw

Given:	Units Produced:	25,000
	Units Sold:	20,000
	Selling Price/Unit:	50
	Variable costs per unit:
	Manufacturing:
	Direct materials	6.00
	Direct labor	9.00
	Variable manufacturing overhead	3.00
(period cost)	Variable selling and administrative	4.00
	Fixed costs per year:
	Fixed manufacturing overhead	300,000
(period cost)	Fixed selling and administrative	190,000
	During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company’s product is $50 per unit.
					On Own
1	Assume Absorption Costing:		2	Assume Variable Costing:
	a. Compute the unit product cost.			a. Compute the unit product cost.
	b. Prepare an income statement for the year.		Hints	b. Prepare an income statement for the year.
			NOIabsorption = 130K
	Absorption Costing Income Statement		NOIvariable = 70K	Variable Costing Income Statement

EX7-Raw

Prepare an income statement that uses the contribution format and is segmented by divisions.
Show each item on the segmented income statements as a percent of sales.
Given:	North	% Sales	South	% Sales	Overall	% Sales
Sales					$ 500,000
TVC
CM	150,000	50%				46%
FCtraceable
Segment Margin			$ 30,000
Common FC					90,000
NOI					$ 10,000
					On Own

EX10-Raw

1	Compute the companywide break-even point in dollar sales.
2	Compute the break-even point in dollar sales for the East region.
3	Compute the break-even point in dollar sales for the West region.
	Given:	Total Company	East	West
	Sales	$ 900,000	$ 600,000	$ 300,000
	Variable expenses	675,000	480,000	195,000
	Contribution margin	225,000	120,000	105,000
	Traceable fixed expenses	141,000	50,000	91,000
	Segment margin	84,000	$ 70,000	$ 14,000
	Common fixed expenses	59,000
	Net operating income	$ 25,000		On Own