Restate golden stars income statement in contribution

Assignment Help Accounting Basics

Reference no: EM13395735

Golden Star Company manufactures and sells a unique product that has been quickly accepted by the consumers. The results of last month's operations are shown below (absorption costing basis):

Sales (10,000 units @ $20)	$200,000
Less: cost of goods sold (10,000 units @ $14)	140,000
Gross margin	60,000
Less: selling and administrative expenses	45,000
Net income	$ 15,000

Variable selling and administrative expenses are $2 per unit. Variable manufacturing costs total $10 per unit, and fixed manufacturing overhead costs total $48,000 per month. There was no beginning inventory. The company produced 12,000 units during the month.

Required:

1- Restate Golden Star's income statement in contribution margin format, using variable costing.

2- Reconcile the variable costing and absorption costing net income figures.

3- State which costing approach is used in published financial statements, and briefly explain the usefulness of the other approach.

4- The easiest way to distinguish between relevant and irrelevant costs is by cost behavior; variable costs are relevant costs and fixed costs are irrelevant costs. Explain why you do or do not agree with this statement and support your answer with suitable example(s).

Reference no: EM13395735

Questions Cloud

Write down a 750-1200 word paper describing the : write a 750-1200 word paper discussing the evolutionary changes associated with human organ systems.compare and

The suggested retail price and wholesale prices of cowgirl : marilyn lysohir an internationally celebrated ceramic artist started cowgirl chocolates to provide some funding support

If you choose use the week 5 conference topic entitled : design and defend an optimal performance appraisal system for your current position or for one to which you aspire. the

Does good 2 point to economies of scalenbsp why or why not : suppose a firm has the production technology shown below for goods 1 and goods 2 and respond to the following with an

Restate golden stars income statement in contribution : golden star company manufactures and sells a unique product that has been quickly accepted by the consumers. the

Review earning buyer trust and read about the five : 1. account relationshipsreview earning buyer trust and read about the five trust-earning components identified in

Explain how the clonal expansion theory describes the more : describe how the clonal expansion theory explains the more rapid production of antigen specific antibodies helper

Which economic system is best suitable for handling the : prepare a two- to three-page paper in apa style sixth edition format that describes explains addresses and answers the

Great corporation has the following situation debt one : great corporation has the following situation. debt one thousand bonds were issued five years ago at a coupon rate of

User Account

All Pages