Prepare a revised operating profit report

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Reference no: EM13534429

The Company X's operating profit report and summary of manufacturing activity presented below. Note that its annual production capacity is 150,000 units, but the business manufactured only 120,000 units during the year. Therefore, it had 20 percent idle capacity (30,000 units not produced ÷ 150,000 units production capacity = 20 percent idle capacity). However, the cost of idle capacity isn't treated as a separate period cost; all the company's fixed manufacturing overhead costs are included in calculating its product cost. Suppose that the business treats the cost of idle capacity as a period cost. Prepare a revised operating profit report and summary of manufacturing activity for the business.

 

Company X

 
 

Per Unit

Totals

Operating Profit Report for Year

   

Sales volume, in Units

 

110,000

Sales Revenue

$1,400.00

$154,000,000

Cost of Goods Sold Expense (see below)

-760

-83,600,000

Gross Margin

$640.00

$70,400,000

Variable Operating Expenses

-300

-33,000,000

Contribution Margin

$340.00

$37,400,000

Fixed Operating Expenses

 

-21,450,000

Operating Profit

 

$15,950,000

Manufacturing Activity Summary for Year

Per Unit

Totals

Annual Production Capacity, in Units

 

150,000

Actual Output, in Units

 

120,000

Raw Materials

$215.00

$25,800,000

Direct Labor

125

15,000,000

Variable Manufacturing Overhead Costs

70

8,400,000

Total Variable Manufacturing Costs

$410.00

$49,200,000

Fixed Manufacturing Overhead Costs

350

42,000,000

Product Cost and Total Manufacturing Costs

$760.00

$91,200,000

Reference no: EM13534429

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