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Question 1. Prepare income statements for TV Plus in January. February. and March 2017 under throughput costing.
Question 2. Contrast the results in requirement 1 with the operating income results under variable costing and absorption costing.
Question 3. Give one motivation for TV Plus to adopt throughput costing.
January
February
March
Direct material cost per unit
$ 325
Direct manufacturing labor cost per unit
75
Manufacturing over
January 2017 February 2017
March 2017
Revenues
Cost of goods sold:
3.220.000
$ 3.430.000
3.640.000
Beginning inventory
0
$ 106,800
Variable manufacturing costs
875,000
857,500
892,500
Allocated fixed manufacturing costs
460,000
450,800
469,200
Cost of goods available for sale
1.335.000
1.415.100
1,468.500
Less: Ending inventory
(106,800)
(80,100)
Adj. for production-volume variance
9.200 u
(9,200) F
Cost of goods sold
1.228.200
1.317.500
1.379.200
Gross margin
1,991.800
2,112,500
2.260,800
Operating costs:
Variable operating costs
805,000
910,000
Fixed operating costs
110.000
110,000
Total operating costs
915,000
967.500
1.020 000
Operating income
1.076.800
1.145.000
1.240.800
300
$ 700
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