Chat with AI
Accounting for Decision Making and Control 8th Edition by Jerold Zimmerman
Edition 8ISBN: 978-0078025747Accounting for Decision Making and Control 8th Edition by Jerold Zimmerman
Edition 8ISBN: 978-0078025747 Exercise 7
Alliance Tooling
Alliance Tooling produces a single product in its plant. At the beginning of the year, there were no units in inventory. During the year, Alliance produced 120,000 units and sold 100,000 units at $26.75 per unit. Variable manufacturing costs are $13.50 per unit. Alliance pays $2.70 per unit for sales commissions and shipping. It has fixed costs of $720,000 for selling and administration. Its tax rate is 40 percent.
Required:
a. Prepare an income statement for Alliance Tooling using absorption costing.
b. Prepare an income statement for Alliance Tooling using variable costing.
c. Explain why the net income figures computed in ( a ) and ( b ) differ.
Alliance Tooling produces a single product in its plant. At the beginning of the year, there were no units in inventory. During the year, Alliance produced 120,000 units and sold 100,000 units at $26.75 per unit. Variable manufacturing costs are $13.50 per unit. Alliance pays $2.70 per unit for sales commissions and shipping. It has fixed costs of $720,000 for selling and administration. Its tax rate is 40 percent.
Required:
a. Prepare an income statement for Alliance Tooling using absorption costing.
b. Prepare an income statement for Alliance Tooling using variable costing.
c. Explain why the net income figures computed in ( a ) and ( b ) differ.
Explanation
Verified
Verified
Income Statement:
It is a part of the b...
Accounting for Decision Making and Control 8th Edition by Jerold Zimmerman
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
