Pprepare garrards 2014 income statement

Assignment Help Cost Accounting

Reference no: EM131810347

The Garrard Company manufactures trendy, high-quality moderately priced watches. As Garrard's senior financial analyst, you are asked to recommend a method of inventory costing.

The CFO will use your recommendation to prepare Garrard's 2014 income statement. The following data are for the year ended December 31, 2014.

Requirements

1. Prepare income statements under variable and absorption costing for the years ended December 31, 2014.

2. What is Garrard's operating income as percentage of revenues under each costing method?

3. Explain the difference in operating income between the two methods.

4. Which costing method could you recommend to the CFO? Why?

Beginning Inventory, January 1, 2014 87,000 units

Ending Inventory, December 31, 2014 33,000 units

2014 sales 315,000 units

Selling price (to distributor) $23.00 per unit

Variable manufacturing cost per unit, including direct materials $5.70 per unit

Variable operating (marketing) cost per unit sold $1.40 per unit sold

Fixed manufacturing costs $1,242,000

Denominator-level machine-hours 5,400

Standard production rate 50 units per machine-hour

Fixed operating (marketing) costs $1,060,000

Reference no: EM131810347

Questions Cloud

Research equipment and has projected the benefits : (a) What is the after-tax rate of return? (b) What is the before-tax rate of return?

Journalize the issuance of the preferred stock : Garb Inc. issues 4,700 shares of $110 par value preferred stock for cash at $135 per share. Journalize the issuance of the preferred stock.

Layout of a new research and experimentation facility : An engineer is working on the layout of a new research and experimentation facility.

What would be the total cost both fixed and variable : What would be the total cost, both fixed and variable, at an activity level of 8,600 units? Assume that this level of activity is within the relevant range

Pprepare garrards 2014 income statement : The CFO will use your recommendation to prepare Garrard's 2014 income statement. The following data are for the year ended December 31, 2014.

Compute the before-tax rate of return : a) Compute the before-tax rate of return. b) Compute the after-tax rate of return, based on MACRS depreciation and a 34% combined corporate income tax rate.

Sox has changed the work of independent auditors : SOX has changed the work of independent auditors; auditors have to evaluate internal controls and issue an opinion

Compute the after-tax rate of return for the truck : At the end of 4 years, Ogi sold the truck for $3000. The combined federal and state income tax rate for Ogi is 45%.

Find the chance that cookie contains four chocolate chips : Granma makes a cookie using three cubic inches of her dough. Find the chance that the cookie contains at most four chocolate chips, state your assumptions.

User Account

All Pages