Smart Products Inc(1) All 200,000 Units Produced During Year 1 Are Sold

Question

Examlex · Accepted Answer

The Answer is (1) a. Traditional incorne statement (absorption costing), Year I:

\begin{array}{lr} ext { Sales } & \$ 80,000,000 ^a\ ext { Cost of goods sold } & 52,400,000 ^b\ ext { Gross margin } & \$ 27,600,000 \ ext { Selling and admin. costs } & \underline{4,400,000}^c \ ext { Operating profit } & \$ 23,200,000\end{array}

{}^{a} \$ 80,000,000=\$ 400 imes 200,000

units sold

{}^{b} \$ 52,400,000=(\$ 2

per unit fixed production cost

imes 200,000

units sold

)+

($260 per unit variable production cost

imes 200,000

units sold)

{}^{c } \$ 4,400,000=\$ 400,000

fixed selling and admin. cost

+(\$ 20

per unit
variable selling and admin. cost

imes 200,000

units sold)

$(1) a. Traditional incorne statement (absorption costing), Year I: \begin{array}{lr} ext { Sales } & \$ 80,000,000 ^a\ ext { Cost of goods sold } & 52,400,000 ^b\ ext { Gross margin } & \$ 27,600,000 \ ext { Selling and admin. costs } & \underline{4,400,000}^c \ ext { Operating profit } & \$ 23,200,000 \end{array} {}^{a} \$ 80,000,000=\$ 400 imes 200,000 units sold {}^{b} \$ 52,400,000=(\$ 2 per unit fixed production cost imes 200,000 units sold )+ ($260 per unit variable production cost imes 200,000 units sold) {}^{c } \$ 4,400,000=\$ 400,000 fixed selling and admin. cost +(\$ 20 per unit variable selling and admin. cost imes 200,000 units sold) (2) a. Traditional incorme statement (absoption costing), Year 2: \begin{array}{lr} ext { Sales } & \$ 64,000,000^a \ ext { Cost of goods sold } & 41,920,000 ^b\ ext { Gross margin }& \$ 22,080,000 \ ext { Selling and admin costs } & \underline{3,600,000}^c \ ext { Operating profit } & \$ 18,480,000 \end{array} {}^{a} \$ 64,000,000=\$ 400 imes 160,000 units sold {}^{b} \$ 41,920,000=(\$ 2 per unit fixed production cost imes 160,000 units sold )+ ($260 per unit variable production cost imes 160,000 units sold) {}^{c} \$ 3,600,000=\$ 400,000 fixed selling and admin. cost +(\$ 20 per unit variable selling and admin. cost imes 160,000 units sold) {}^a \$ 64,000,000=\$ 400 imes 160,000 units sold {}^b \$ 41,600,000=\$ 260 per unit variable production cost imes 160,000 units sold {}^c\$ 3,200,000=\$ 20 per unit variable selling and admin. cost imes 160,000 units sold {}^d Variable costing treats fixed manufacturing overhead as a period cost. Thus, all fixed manufacturing overhead costs are expensed in the period incurred regardless of the level of sales. {}^e Given$
(2) a. Traditional incorme statement (absoption costing), Year 2:

\begin{array}{lr} ext { Sales } & \$ 64,000,000^a \ ext { Cost of goods sold } & 41,920,000 ^b\ ext { Gross margin }& \$ 22,080,000 \ ext { Selling and admin costs } & \underline{3,600,000}^c \ ext { Operating profit } & \$ 18,480,000\end{array}

{}^{a} \$ 64,000,000=\$ 400 imes 160,000

units sold

{}^{b} \$ 41,920,000=(\$ 2

per unit fixed production cost

imes 160,000

units sold

)+

($260 per unit variable production cost

imes 160,000

units sold)

{}^{c} \$ 3,600,000=\$ 400,000

fixed selling and admin. cost

+(\$ 20

per unit
variable selling and admin. cost

imes 160,000

units sold)

$(1) a. Traditional incorne statement (absorption costing), Year I: \begin{array}{lr} ext { Sales } & \$ 80,000,000 ^a\ ext { Cost of goods sold } & 52,400,000 ^b\ ext { Gross margin } & \$ 27,600,000 \ ext { Selling and admin. costs } & \underline{4,400,000}^c \ ext { Operating profit } & \$ 23,200,000 \end{array} {}^{a} \$ 80,000,000=\$ 400 imes 200,000 units sold {}^{b} \$ 52,400,000=(\$ 2 per unit fixed production cost imes 200,000 units sold )+ ($260 per unit variable production cost imes 200,000 units sold) {}^{c } \$ 4,400,000=\$ 400,000 fixed selling and admin. cost +(\$ 20 per unit variable selling and admin. cost imes 200,000 units sold) (2) a. Traditional incorme statement (absoption costing), Year 2: \begin{array}{lr} ext { Sales } & \$ 64,000,000^a \ ext { Cost of goods sold } & 41,920,000 ^b\ ext { Gross margin }& \$ 22,080,000 \ ext { Selling and admin costs } & \underline{3,600,000}^c \ ext { Operating profit } & \$ 18,480,000 \end{array} {}^{a} \$ 64,000,000=\$ 400 imes 160,000 units sold {}^{b} \$ 41,920,000=(\$ 2 per unit fixed production cost imes 160,000 units sold )+ ($260 per unit variable production cost imes 160,000 units sold) {}^{c} \$ 3,600,000=\$ 400,000 fixed selling and admin. cost +(\$ 20 per unit variable selling and admin. cost imes 160,000 units sold) {}^a \$ 64,000,000=\$ 400 imes 160,000 units sold {}^b \$ 41,600,000=\$ 260 per unit variable production cost imes 160,000 units sold {}^c\$ 3,200,000=\$ 20 per unit variable selling and admin. cost imes 160,000 units sold {}^d Variable costing treats fixed manufacturing overhead as a period cost. Thus, all fixed manufacturing overhead costs are expensed in the period incurred regardless of the level of sales. {}^e Given$

{}^a \$ 64,000,000=\$ 400 imes 160,000

units sold

{}^b \$ 41,600,000=\$ 260

per unit variable production cost

imes 160,000

units sold

{}^c\$ 3,200,000=\$ 20

per unit variable selling and admin. cost

imes 160,000

units sold

{}^d

Variable costing treats fixed manufacturing overhead as a period cost. Thus, all fixed manufacturing overhead costs are expensed in the period incurred regardless of the level of sales.

{}^e

Given

Smart Products Inc (1) All 200,000 Units Produced During Year 1 Are Sold

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Smart Products Inc (1) All 200,000 Units Produced During Year 1 Are Sold

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Correct Answer:VerifiedShow Answer

Correct Answer:
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