Essay
Dynamic Designs,Inc.has developed a new design to produce track shoes that are used in cross-country races.The company's shoe design is innovative in that the insole is made od a product that provides a greater cushion and adapts more easily to a runner's foot.Management estimates expected annual capacity to be 80,000 units;overhead is applied using expected annual capacity.The company's cost accountant predicts the following current year activities and related costs:
| Standard unit variable manufacturing costs | $140 |
| Variable unit selling expense | $6 |
| Fixed manufacturing overhead | $2,400,000 |
| Fixed selling and administrative expenses | $164,000 |
| Selling price per unit | $225 |
| Units of sales | 70,000 |
| Units of production | 81,000 |
| Units in beginning inventory | 15,000 |
Other than any possible under- or overapplied fixed overhead,management expects no variances from the previous manufacturing costs.Under- or overapplied fixed overhead is to be written off to Cost of Goods Sold.
Required:
1. Determine the amount of under- or overapplied fixed overhead using (a) variable costing and (b) absorption costing.
2. Prepare projected income statements using (a) variable costing and (b) absorption costing.
3. Reconcile the incomes derived in part 2.
Correct Answer:
Verified
Other than any possible under- or overap...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q132: The high-low method excludes outliers from the
Q133: Cost allocation is the assignment of _
Q134: Phoenix Corporation<br>The records of Phoenix Corporation revealed
Q135: If a firm produces more units than
Q136: If underapplied overhead is considered to be
Q138: Why is variable costing not used extensively
Q139: A credit to the Factory Overhead account
Q140: The dollar amount of overhead assigned to
Q141: Rosewood Corporation<br>Rosewood Corporation produces a single product.The
Q142: A mixed cost has which of the