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1. The Year 1 Year 2 Sales $1,200,000 $1,200,000 Charlotte Company produces a single product. The company had the following results for its first two years of operation: Cost of goods sold 800,000 680,000 Gross margin 400,000 520,000 Selling and administrative expenses 300,000 330,000 Net operating income (loss) $100,000 $220,000 Additional information about the company is as follows: In Year 1, the company produced and sold 40,000 units of its only product. In Year 2, the company again sold 40,000 units, but increased production to 50,000 units. The company' variable production cost is $5 per unit and its fixed manufacturing overhead cost is $600,000 per year. Fixed manufacturing overhead costs are applied to the product on the basis of each year's unit production (i.e. a new fixed overhead rate is computed each year). Variable selling and administrative expenses are $2 per units sold. Required : a. Compute the unit product cost for each year under absorption costing and under variable costing. b. Prepare an income statement for each year, using the contribution approach with variable costing. c. Reconcile the variable costing and absorption costing income figures for each year. d. Explain why the net operating income for Year 2 under absorption costing was higher than the net operating income for Year 1, although the same number of units were sold in each year.
Bill Berry, CPA, prepares tax returns. The production costs and the number of tax returns prepared for the month of August are as follows:
Several years ago, Joy acquired a passive activity. Until 2006, the activity was profitable. Joy's at-risk amount at the beginning of 2006 was $250,000. The activity produced losses of $100,000 in 2006, $80,000 in 2007, and $90,000 in 2008. During..
A physical inventory on December 31 shows 2,000 units on hand. Holliday sells the units for $12 each. The company has an effective tax rate of 20%. Holliday uses the periodic inventory method.
On January 1, 2010, Ellison Co. issued eight-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values are: The present value of the ..
Assuming Venus Corporation did not issue any more common stock in 2006, how does the increase in value of its outstanding stock affect Venus?
Given the firm's projections and dividend payments plans, what are its discretionary financing needs?
Jewelry stores want to provide their customers with the highest quality of diamonds available at the lowest possible prices. Unfortunately, the lowest priced diamonds these days are sold by African rebels who use the profits to engage in genocide.
What are some key elements of Internal Controls? What are some of the key Internal Controls at your workplace and/or you are familiar with? Why do auditors have to review Internal Controls of an organization? - Answer 150-200 words
beginning finished goods inventory, $252,000; ending work in process inventory, $220,000; and ending finished goods inventory, $264,000. Utley Manufacturing Company's cost of goods sold for the year is which of the following?
Why is it important to distinguish debt cancellation from a gift, bequest, or renegotiation of a purchase price?
Let's talk about donated services. Clearly unique to nonprofits (well, I've never heard of anyone willingly donating their time and efforts to General Motors, but I guess it's possible) - What does FASB say about donated services?
The hockory Cabinet and furniture Company makes chairs. The fixed cost per month of making chairs is $7,500, and the variable cot per chair is $40. Price is related to demand according to the following linear equation.
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