1 answer

Required information The following information applies to the questions displayed below) Oak Mart, a producer of...

Question:

Required information The following information applies to the questions displayed below) Oak Mart, a producer of solid oak ta
2. Prepare the current year income statement for the company using absorption costing. art 2 of 2 OAK MART COMPANY Absorption
1. Prepare the current-year income statement for the company using variable costing. OAK MART COMPANY Variable Costing Income
Required information The following information applies to the questions displayed below) Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. 319 per unit 110,000 units 113,250 units 3,250 units $ 455,000 260,000 715,000 $ Sales price per unit Units produced this year Units sold this year Units in beginning-year inventory Beginning inventory costs Variable (3,250 units x $140) Fixed (3,250 units X $80) Total Manufacturing costs this year Direct materials Direct labor Overhead costs this year Variable overhead Fixed overhead Selling and administrative costs this year Variable Fixed 44 per unit 62 per unit $3,400,000 57,400,000 $1,400,000 4,400,000
2. Prepare the current year income statement for the company using absorption costing. art 2 of 2 OAK MART COMPANY Absorption Costing Income Statement $ 35,107,500 nts Sales Less: Cost of goods sold Beginning inventory Manufacturing costs this year Direct materials Direct labor Variable overhead costs Fixed overhead costs 4,840,000 4,840 6,820,000 3,400,000 7400,000 Cost of goods sold Gross margin 22,460,000 11,932,500 Net Income (loss) 5 6,132,500 Number of units added to subtracted from) inventory Fixed costs added to(subtracted from) inventory
1. Prepare the current-year income statement for the company using variable costing. OAK MART COMPANY Variable Costing Income Statement of 2 35107500 Sales Less: Variable costs Beginning inventory Variable costs 11 6.820 000 4.840.000 Fixed costs Manufacturing costs this year Direct materials Direct labor [ 4.840,000 6,820,000 3,400,000 26.720,000 Variable overhead costs Total variable costs available Less: Ending finished goods inventory Variable cost of goods sold Variable selling and administrative expenses 18.192.500 Total variable costs Contribution margin Less: Fixed expenses Beginning inventory Fixed overhead costs Fixed selling and administrative costs Total fixed expenses $ 260,000 7400 000 4 400.000 12.060.000 $ 6.132.500 Net income (loss)

Answers

Variable Costing Income Statement- Oak Mart
Sales $35,107,500
Less:Variable Costs
Beginning Inventory
Variable Costs. $455,000
Manufacturing Cost Of This Year
Direct Materials (44X 110000) $4,840,000
Direct Labor (62X 110000) $6,820,000
Variable Overhead Costs $3,400,000
Total Variable Costs Available $15,515,000
Less:Ending Finished Goods Inventory $0
Variable Cost Of Goods Sold $15,515,000
Add: Variable Selling And Administrative Expense $1,400,000
Total Variable Costs $16,915,000
Contribution Margin $18,192,500
Less:Fixed Expenses
Fixed Selling And Administration Costs $4,400,000
Fixed Overhead Costs $7,400,000
Tota Fixed Expenses $11,800,000
Net Income (Loss) $6,392,500
Absorption costing income statement- Oak Mart
Sales $35,107,500
Less:Cost Of Goods Sold
Beginning Inventory $715,000
Manufacturing Cost Of This Year
Direct Materials (44X 110000) $4,840,000
Direct Labor (62X 110000) $6,820,000
Variable Overhead Costs $3,400,000
Fixed Overhead Costs $7,400,000
Less:Ending Inventory
Cost Of Goods Sold $23,175,000
Gross Margin $11,932,500
Selling General And Administrative Expense
Fixed Selling And Administrative Cost $4,400,000
Variable Selling And Administrative Cost $1,400,000
Tota Fixed Expense $5,800,000
Net Income (Loss) $6,132,500
Net Income Under Variable Costing Is Higher Than
NI Under Absoprtion Costing By (6392500-6132500)
$260,000
Number Of Units Added To (Subtracted From ) Inventory 3,250
Fixed Overhead Cost Per Unit $80
Fixed Cost Added To(Subtracted From) Inventory $260,000
.

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