Managerial Accounts

Ghapter I Absorption and Variable Cosiing

Required:

l. ('onrputc thc product oost pcr container ol'liozen rogurt under (a) variahle costing arcl (i) absorption costir)g.

2. I)reparc inconrc statcnrcnts lirr 20x I using (a) absoqrtion costing and (/l) r,ariahlc c(rsting. 3. I{cconcilethcittcotncreportcdunderthet\\omethodsbl listingthetrioke_r'placcsshcrethc

inconrc stalenrents di Ilcr.

d. fleconcile the incorne reportcd r-mdcrthe trio r.nelhods using thc shortcul nreth()d. 5. ( onstruct an l:xcel spreadshcct to solve all ol'the prececling rcquircnterrts.

Shoii how the solution rrill change if'the firlloriing inftrnlation changes: the selling price and rlirecl-matcrial cost pe r unit alc $ l(r.()0 and $.1.-i0. rcspecti\ cl]'.

Relcr to thc inl'ornration gir en in the prececling problern lbr Skinny [)ippers. Inc. Assunte thal the conl- pany has uttrrntil/etl spending firr direct labor and rlanutircturing orcrhead: ilirect ntateriai is thc onir unit-level production cost.

Required:

L C'ontptttc the cost o1'Skinnl I)ippers'year-cnd tinished-goocls invcntorv using tlrnruglrput costing. 2. I)reparc an inconre statcrnent lirr 20r I usine throughput c():Lins. l. Ilrieflr crplain the dillerencc bct*ccn gross rnargirr cornputcd undcr absoqrtion custing and gnrss

nrargin conrputccl unrlcr throughpLrt costing. -1. ('ottstruct an lrrcel sprcaclshcct to solve recluircment (2) above. Shorv horv

thc solutitxr lill changc il-thc lblloriing inlbrnration changcs. thc selling price atrd dircct-material cosl per unit arc $ I 6.00 and 5-1.-5(1. rcspccti\ el\.

\tliosstone ('orn1tan1 began opcralior.rs un Januan I to procluce a single product. It Lrsed an absorp- liou costing s-rstcm uith a 1:rlanncd production r.olunrc ol'100"000 units. Durins its llrst \L.ar olopcra- tiotrs. the planned production roirrnre uas achie\cd. and there \\cre tlo lixed sclling or adrnirristrative c\pellsos. lnvotltory on [)ccr:nrber i I rvas 20.000 turits. anti nct irrconrc for thc rear ri'as $2;10.000.

Required:

l. ll Yelloristotte ('onrpartr had usecl variable costing. its net irrcomc riould ltarc bccn 5220.000. C ornpr:tc the break-er crr point in units under r ariablc custing.

2. Drar,r,a prolit-volume graph lirr Ycllori,stone ('ontpan_t. (Usc rariahlc costing.)

Outbacli Corporatiorr nranulitcturcs lcchargcablc llashlights in lJrisbairc. Australia. Ihe linn Lrse-s an absorption costing s\ stcrr lirr inlenral reporting purposcs: holcrcr, lhc colnpanl is considering usirrg rariable costillg. [)ata regarding Outback's plannecl alld actual ope rltions firr ]0r I ftrllou:

Budgeled Costs

Tolal Actual Costs D'?r"' L...... [Jru,t]. I'L......... la al - r,t rr uJ: I'tt 'Lt . r , ',-cJ .... . r'cd -. rr.'..-.'in . n, ,n .. Variahl. s"lrn! - Jr l\-\ .

'oLJ 'rJ, td \F.

!xr.3fil 1il;6i-i5,alivc ",1r, sej

F red adr nistrative expe,rses

rrt rl ... $6.620 00c

341

Problem &-22 Straightforward Problenr on

Througlrput Costing

Problem 8-23 Absorption anC Variable

::osting. CVP Anal;,s s

Problem 8-24 Varable versus Absorption

Coslingr JIT

$ r 2.0i

L00 ,1.0t

5.00

B.00

7.C0

204

3.00

ryli!

$r,1i80,000

r,260,000

560 001)

700,000

1 .t 20,{100

980,000

280 000

420,000

$7 000,000

.15,000

I 4U 000

1 10 t]cc

si,56t],00c

l,1 lu.{J00

520 U(]C

714r,000

r ,000 00c

980 C00

250 000

425.AAA

3:.0tiil

1 2i, (l,l'l

1 38.lrilil

Beginn ng fir shed gcods inven;ory in uiiits .. . . . ..... . .

Sales in units

PioCuctrcn rn,;rits