Please only answer if you can help with all of it. Thank you. Sonic produces and
ID: 2398069 • Letter: P
Question
Please only answer if you can help with all of it. Thank you.
Sonic produces and sells a product with the following information:
Unit selling price $110 per unit
Unit variable production costs:
Direct materials $30 per unit
Direct labor $12 per unit
Variable overhead $3 per unit
Fixed production costs $140,000 total
Variable selling costs $4 per unit
Fixed selling costs $200,000 total
A: If 10,000 units are produced and 9,000 units sold. What is the amount of absorption costing net income?
B: Then what would be the variable costing net income?
C: Explain the difference between absorption costing (9,000 sold) and variable costing from 10,000 provided.
D: If 10,000 were produced and 10,000 sold what is the dollar amount of absorption costing net income?
E: If 10,000 sold and 10,000 were made. What is the dollar amount variable costing net income?
F: If 10,000 were sold and 10,000 were produced, explain any difference in absorption and variable costing net income
G: If 10,000 units are produced and 12,000 units are sold, what is the dollar amount of absorption costing net income?
H: If 10,000 units are produced and 12,000 units are sold, what is the dollar amount of variable costing net income?
I: If 10,000 were produced and 12,000 were sold, explain any difference in absorption and variable costing net income?
Explanation / Answer
Construct The Absorption Costing Unit Product Cost Direct Material 30 Direct labour 12 Variable Manufacturing overheads 3 Fixed Manufacturing overheads 14.00 (140000/10000 Units Absorption costing unit prroduct cost 59.00 Compute the Variable costing Unit Product cost Direct Material 30 Direct labour 12 Variable Manufacturing overheads 3 Variable costing unit prroduct cost 45 Cas-1 Produced 10000 and Sold 9000 units Construct the Absorption Costing Income Statement Under FIFO Year 1 Sales $990,000 Cost of Goods sold 531000 Gross Margin $459,000 Selling and distribution expense 236,000 Net operating income 223,000 Construct The Variable Costing Income Statement under FIFO YEAR 1 Sales 990,000 Less: Variable cost variable cost of goods sold 405,000 Variable selling expense 36,000 441,000 Contribution margin 549,000 Fixed expense: Fixed Manufacturing overheads 140,000 Fixed selling expense 200,000 Net operating Income 209,000 Recociliation: Income Under variable costing: 209000 Add: Fixed OH deferred in Ending Inventory 14000 (1000 units @14) Income under Absorption costing 223000 Case-2 Produced and sold 10000 units Construct the Absorption Costing Income Statement Under FIFO Year 1 Sales $1,100,000 Cost of Goods sold 590000 Gross Margin $510,000 Selling and distribution expense 240,000 Net operating income 270,000 Construct The Variable Costing Income Statement under FIFO YEAR 1 Sales 1,100,000 Less: Variable cost variable cost of goods sold 450,000 Variable selling expense 40,000 490,000 Contribution margin 610,000 Fixed expense: Fixed Manufacturing overheads 140,000 Fixed selling expense 200,000 Net operating Income 270,000 No differencce, hencec no reconciliation required. CASE-3 Produced 10000 units and 12000 sold. Construct the Absorption Costing Income Statement Under FIFO Year 1 Sales $1,320,000 Cost of Goods sold 708000 Gross Margin $612,000 Selling and distribution expense 248,000 Net operating income 364,000 Construct The Variable Costing Income Statement under FIFO YEAR 1 Sales 1,320,000 Less: Variable cost variable cost of goods sold 540,000 Variable selling expense 48,000 588,000 Contribution margin 732,000 Fixed expense: Fixed Manufacturing overheads 140,000 Fixed selling expense 200,000 Net operating Income 392,000 Recociliation: Income Under variable costing: 392000 Less: Fixed OH released in beginning Inventory 28000 (2000 units @14) Income under Absorption costing 364000