Chapter 21: Q-21-15 (page 1169)
How do service companies differ from manufacturing companies?
Answer
Service companies do not produce any product.
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Analyzing profitability
Relative Furniture Company manufactures and sells oak tables and chairs. Price and cost data for the furniture follow:
Tables Chairs
Sales Price \( 1,400 \) 50
Variable manufacturing costs 1,148 21
Sales commission (8%) 112 4
Relative Furniture has three sales representatives: Abe, Brett, and Corrin. Abe sold 50 tables with 4 chairs each. Brett sold 110 tables with 6 chairs each. Corrin sold 90 tables with 8 chairs each.
Requirements:
Question: Computing variable costing operating income Refer to the information for Concord, Inc.
Requirements:
Use the following information for Exercises E21-14 and E21-15.
Concord, Inc. has collected the following data for November (there are no beginning inventories):
Units produced and sold 500 units Sales price $ 450 per unit Direct materials 64 per unit Direct labor 68 per unit Variable manufacturing overhead 26 per unit Fixed manufacturing overhead 7,500 per month Variable selling and administrative costs 15 per unit Fixed selling and administrative costs 4,400 per month
Using Excel for variable costing
Download an Excel template for this problem online in MyAccountingLab or athttp://www.pearsonhighered.com/Horngren. Tiger Mountain Gelato incurs thefollowing costs for its premium ice cream in May 2018:
Direct materials cost per pint $ 2.50 perpint
Direct labor cost per pint 0.75 per pint
Variable manufacturing overhead cost per pint 0.25 per pint
Fixed manufacturing overhead costs 6,000 per month
Total fixed selling and administrative costs 5,000 per month
Sales price per pint 8.00 per pint
Pints of gelato produced 12,000 pints
Pints of gelato sold 11,500 pints
There were no beginning inventories, so Tiger Mountain Gelato has 500 pintsin ending Finished Goods Inventory (12,000 pints produced less 11,500 pintssold).
Requirements
1. Calculate Tiger Mountain Gelato’s product cost per pint under absorptioncosting and variable costing.
2. Calculate the balance in Finished Goods Inventory on May 31, 2018, usingabsorption costing and variable costing.
3. Prepare income statements in good form for Tiger Mountain Gelato for May2018 using absorption costing and variable costing.
4. Reconcile the differences between operating incomes and Finished GoodsInventory balances between the two-costing method
Question: Preparing absorption costing income statements, production exceeds sales
Refer to Exercise E21-16.
Requirements:
The Stark Company manufactures a product that is expected to incur \(20 per unit in variable production costs and sell for \)40 per unit. The sales commission is 10% of the sales price. Due to intense competition, Stark actually sold 200 units for \(38 per unit. The actual variable production costs incurred were \)23.75 per unit. Calculate the total contribution margin and contribution margin ratio at the expected price/costs and the actual price/costs. How might management use this information?
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