Income statement preparation using contribution and

Assignment Help Financial Accounting
Reference no: EM13356704

Income statement preparation using contribution and Absorption Costing

Straightforward Income Statements

The Independence Company had the following manufacturing data for the year 2006 (in thousands of dollars).
Beginning and ending inventories none


Direct material used $400

Direct labor 330

Supplies 20

Utilities-variable portion 40

Utilities-fixed portion 12

Indirect labor-variable portion 90

Indirect labor-fixed portion 40

Depreciation 200

Property taxes 20

Supervisory salaries 50

Selling expenses were $300,000 (including $60,000 that were variable) and general administrative expenses were $144,000 (including $23,000 that were variable). Sales were $1.8 million. 

Direct labor and supplies are regarded as variable costs.

1. Prepare two income statements, one using the contribution approach and one using the absorption approach.

2. Suppose that all variable costs fluctuate directly in proportion to sales and that fixed costs are unaffected over a very wide range of sales. What would operating income have been if sales had been $2.0 million instead of $1.8 million? Which income statement did you use to help obtain your answer? Why?

Reference no: EM13356704

Questions Cloud

Computation of break-even-point and contribution margin : computation of break-even-point and contribution margin ratio.breakeven point cost structure and target salesplainfield
Decision on closure of one of the units with the help of : decision on closure of one of the units with the help of decrease in net income.the most recent monthly income
Computation of contribution per unit for various : computation of contribution per unit for various models.person company makes two types of backpacks. data for the
Contribution income statement up to operating : contribution income statement up to operating incomestraightforward contribution income statement yoko ltd. had the
Income statement preparation using contribution and : income statement preparation using contribution and absorption costingstraightforward income statementsthe independence
Cvp analysis- variation in salesunderstanding the effects : cvp analysis- variation in salesunderstanding the effects of operating leverage high tech inc. and old time co compete
Cvp analysis - bepunderstanding the effects of operating : cvp analysis - bepunderstanding the effects of operating leverage high tech inc. and old time co compete within the
Cvp analysis - bepprepare a contribution margin format : cvp analysis - bepprepare a contribution margin format income statement calculate break-even point presented here is
Cvp analysis - bepprepare a contribution margin format : cvp analysis - bepprepare a contribution margin format income statement calculate break-even point presented here is

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is celeste basis after formation of the partnership

Celeste contributed business-related assets valued at $250,000 (basis of $100,000) in exchange for her 50% interest in the Celestine Partnership.

  Discuss what might have caused these variances

determine the rate variance, time variance, and total direct labor cost variance. discuss what might have caused these variances.

  Illustrate what was the cost of the units sold

A company had inventory of 8 units at a cost of $12 each on December 1. On December 2, they purchased 8 units at $21 each. On December 6 they purchased 7 units at $23 each. On December 8, they sold 18 units for $52 each. Using the LIFO perpetual i..

  Sun city savings and loan

who are the "several different parties" to which Johnson refers and how might they be affected?

  Prepare shareholder equity section of vais balance sheet

A shareholder, in an effort to persuade Vai to expand into that city, donated to the company a plot of land with an appraised value of $42,000.

  Enron off-balance sheet accounting fraud

Enron off-balance sheet accounting fraud would have been allowed to happen under IFRS - Apply Enron case study

  Evaluate montes stock basis on december 31

What income and deductions will Monte and Allie report from Raider's current year activities? Evaluate Monte's stock basis on December 31?

  Provide advise the company to accept first

Provide advise the company to accept first, those for A, for B, or for C? Which orders second? Third?

  Compute net cash provided by operating activities

Compute net cash provided by operating activities using the indirect method assuming that net income is $180,980.

  Recognition assets and liabilities in financial statement

ACCT19062 Issues in Financial Reporting, : Recognition of Assets and Liabilities in the Financial Statements,

  What is the predetermined overhead rate

Logan’s actual manufacturing overhead for the year was $741,189 and its actual total direct labor was 35,500 hours. What is the predetermined overhead rate?

  State cultural differences can impact interpretation of ifrs

Research this question and can not find a set forth answer list of countries that have adopted IFRS and how cultural differences can impact interpretation of IFRS.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd