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Problem 7. Hanks Corporation produces a single product. Operating data for the company and its absorption...

Question:

Problem 7. Hanks Corporation produces a single product. Operating data for the company and its absorption costing income statements for the last two years are presented below Units in beginning inventory Units produced Units sold Year Year 2 0 1,000 9,0009,000 8,000 10,000 YearYear 2 $80,000 $100,000 48,000 60,000 32,000 40,000 Selling and administrative expenses 28,000 30,000 S4,000 $10,000 Sales Cost of goods sold Gross margin Net operating income Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead was $18,000 in each year. This fixed manufacturing overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold. Required a. Compute the unit product cost in each year under variable costing b. Prepare new income statements for each year using variable costing c. Reconcile the absorption costing and variable costing net operating income for each year
Problem 7. Hanks Corporation produces a single product. Operating data for the company and its absorption costing income statements for the last two years are presented below Units in beginning inventory Units produced Units sold Year Year 2 0 1,000 9,0009,000 8,000 10,000 YearYear 2 $80,000 $100,000 48,000 60,000 32,000 40,000 Selling and administrative expenses 28,000 30,000 S4,000 $10,000 Sales Cost of goods sold Gross margin Net operating income Variable manufacturing costs are $4 per unit. Fixed manufacturing overhead was $18,000 in each year. This fixed manufacturing overhead was applied at a rate of $2 per unit. Variable selling and administrative expenses were $1 per unit sold. Required a. Compute the unit product cost in each year under variable costing b. Prepare new income statements for each year using variable costing c. Reconcile the absorption costing and variable costing net operating income for each year

Answers

DATA YEAR 1 YEAR 2 0 Opening Inventory Units Produced Units Sold Closing Inventory Selling Price per unit Variable Selling and Administrative Expenses Fixed Manufacturing Overheads Fixed Selling And Distribution Overheads 1000 9000 800010000 0 10 9000 1000 10 18000 18000 20000200001. Calculation of Unit cost Under Variable Costing YEAR 1 YEAR 2 Variable Manufacturing cost Unit Cost 4. 4. 4. 4.</p><p>2. Income Statement Under Variable Costing YEAR 1 YEAR 2 Sales ( @10 Per unit Variable Expense Varaible Manufacturing Cost (@4) Variable Selling and Administrative Expense (@1 Total Varible Expenses Contribution Magin Fixed Expenses Fixed mufacturing Overheads Fixed Sellingand Administrative Expenses Total fixed Expenses Net Operating Income 80000 100000 32000 8000 40000 40000 40000 10000 50000 50000 18000 20000 38000 2000 18000 20000 38000 120003. Reconcile the variable costing and absorption costing Net income YEAR 1 YEAR 2 Variable Costing Net Operating Income Add (

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