Question: Chaney Company provides lawn care services. Following are data for a recent week:
Service Revenue $1,300
Variable Costs $780
Contribution Margin $520 Chaney provided service to 25 customers during the week. Determine the average amount the company charged each customer, the variable cost per customer, and the contribution margin ratio.
The average service price is $52, the variable cost per unit is $31.20, and the contribution margin ratio is 40%.
Average service price = Service Revenue/No. of customers
Variable cost per customer = Variable cost/No. of customers
Net sales revenue
Less: Variable cost
Contribution margin ratio (Contribution margin/net sales revenue)
Question: Computing variable costing operating income Refer to the information for Concord, Inc.
Use the following information for Exercises E21-14 and E21-15.
Concord, Inc. has collected the following data for November (there are no beginning inventories):
Units produced and sold 500 units Sales price $ 450 per unit Direct materials 64 per unit Direct labor 68 per unit Variable manufacturing overhead 26 per unit Fixed manufacturing overhead 7,500 per month Variable selling and administrative costs 15 per unit Fixed selling and administrative costs 4,400 per month
Using absorption and variable costing
Meyer Company reports the following information for March:
Net Sales Revenue $ 45,300
Variable Cost of Goods Sold 12,500
Fixed Cost of Goods Sold 11,800
Variable Selling and Administrative Costs 14,000
Fixed Selling and Administrative Costs 5,400
Computing absorption cost per unit and variable cost per unit
Adamson, Inc. has the following cost data for Product X:
Direct materials $ 41 per unit Direct labor 57 per unit Variable manufacturing overhead 7 per unit Fixed manufacturing overhead 20,000 per year
Calculate the unit product cost using absorption costing and variable costing when production is 2,000 units, 2,500 units, and 5,000 units.
Question: Preparing variable and absorption costing income statements
Game Store manufactures video games that it sells for $38 each. The company uses a fixed manufacturing overhead allocation rate of $3 per game. Assume all costs and production levels are exactly as planned. The following data are from Game Store’s first two months in business during 2018:
Sales 1,500 units 2,900 units
Production 2,800 units 2,800 units
Variable manufacturing cost per game $ 16 $ 16
Sales commission cost per game 8 8
Total fixed manufacturing overhead 8,400 8,400
Total fixed selling and administrative costs 8,000 8,000 Requirements
1. Compute the product cost per game produced under absorption costing and under variable costing.
2. Prepare monthly income statements for October and November, including columns for each month and a total column, using these costing methods:
a. absorption costing.
b. variable costing.
3. Is operating income higher under absorption costing or variable costing in October? In November? Explain the pattern of differences in operating income based on absorption costing versus variable costing.
4. Determine the balance in Finished Goods Inventory on October 31 and November 30 under absorption costing and variable costing. Compare the differences in inventory balances and the differences in operating income. Explain the differences in inventory balances based on absorption costing versus variable costing.
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