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Adria Lopez expected sales of her line of computer workstation furniture to equal 300 workstations (at a sales price of $3,000) for 2014. The workstations' manufacturing costs include the following.




  Direct materials
$ 800 per unit
  Direct labor
$ 400 per unit
  Variable overhead
$ 100 per unit
  Fixed overhead
$ 24,000 per year

The selling expenses related to these workstations follow.






  Variable selling expenses
$ 50 per unit
  Fixed selling expenses
$ 4,000 per year

Adria is considering how many workstations to produce in 2014. She is confident that she will be able to sell any workstations in her 2014 ending inventory during 2015. However, Adria does not want to overproduce as she does not have sufficient storage space for many more workstations.
Required:
1.

Complete the following income statements using absorption costing.

Cost of Goods Sold:                  300 workstations              320 workstations

________________

________________

________________

________________

Cost of goods sold per unit

Number of workstations sold

Total cost of goods sold

Absorption costing income statement:                         300 workstations        320 workstations

Sales..........................................................................

Cost of goods sold...................................................

Gross margin............................................................

Selling general and administrative expenses....

Under absorption costing, can the difference between production volume and sales volume affect the reported net income (loss)?

2. Complete the following income statements using variable costing.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9954024

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