(Answered) Assignmentgraham incquestions1 approximately how busy

Accounting

Assignment

Graham, Inc.

QUESTIONS

1. Approximately how busy (relative to a normal month) was the factory in August?

2. Can you construct an income statement for a "normal" month under both absorption costing and direct costing? Analyze the profit variance for August versus a normal month.

3. Be prepared to explain the profit differences shown in Exhibits 1 and 2 (5-22,928 vs. 5+34,272) and in Exheditibit 3 (5+141,036 vs. 5-59,432).

4. Could the problem in the case ever arise with respect to annual income statements?

5. From a managerial perspective, how does Graham, Inc. earn a profit? Which costing system best reflects the basic economics of the business?

6. What do you recommend?

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