Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Financial Accounting Expert

Question :

Evaluate product cost and purpose an income statement under absorption and variable costing.

Polk Company builds custom fishing lures for sporting goods stores. In its 1st year of operations, 2012, the company incurred the subsequent costs.

Variable Cost per Unit

Direct materials    $7.50

Direct labor    $2.45

Variable manufacturing overhead    $5.75

Variable selling and administrative expenses    $3.90

Fixed Costs per Year

Fixed manufacturing overhead $234,650

Fixed selling and administrative expenses $240,100

Polk Company sells the fishing lures for $25. In 2012, the company sold 80,000 lures and produced 95,000 lures.

Instructions

(a) Consider the company uses variable costing; evaluate Polk's manufacturing cost per unit for 2012.

(b) Prepare a variable costing income statement for 2012.

(c) Consider the company uses absorption costing; evaluate Polk's manufacturing cost per unit for 2012.

(d) Purpose an absorption costing income statement for 2012.

Required

a) In this case, would it be better to use the variable or absorption costing technique, and why?

b) What are the benefits of the two techniques?

c) Which technique would lead to the best decision when a competitor is submitting a lower bid for your product?

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M9133930

Have any Question?


Related Questions in Financial Accounting

Scenario assume that a manufacturing company usually pays a

Scenario: Assume that a manufacturing company usually pays a waste company (by the pound to haul away manufacturing waste. Recently, a landfill gas company offered to buy a small portion of the waste for cash, saving the ...

Comprehensive problem - lou barlow a divisional manager for

Comprehensive Problem - Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of two new products for a five-year period. His annual pay raises are determined by his division's ...

What has been strides position on dividend payouts in the

What has been Strides' position on dividend payouts in the past (pattern, relationship with earnings, etc.)? What factors affected its dividend policy?

Chelsea is expected to pay an annual dividend of 126 a

Chelsea is expected to pay an annual dividend of $1.26 a share next year. The market price of the stock is $24.09 and the growth 2.6 percent. What is the cost of equity?

Ha 3011 advanced financial accounting assignment

HA 3011 Advanced Financial Accounting Assignment - Assessment Task Part A - In an article entitled 'Unwieldy rules useless for investors' that appeared in the Australian Financial Review on 6 February 2012 (by Agnes King ...

Assessment 1develop complex spreadsheetsthis is an

Assessment 1 Develop Complex Spreadsheets This is an assessment that may be worked on in study time and as homework. Assessment presentation should be completed in a manner that is appropriate to professional business re ...

Corporate accounting assignment -assessment task -select

Corporate Accounting Assignment - Assessment task - Select two public limited companies listed on the Australian Securities Exchange (ASX) that are in the same industry. Go to the website of your selected companies. Then ...

Excel quiz1 start excel 2016 and download and open the file

Excel Quiz 1. Start Excel 2016 and download and open the file Excel Quiz1F18. 2. Save the workbook as FirstName_LastName_Excel_Quiz1 where FirstName is your own First Name and LastName is your Surname (for example Roger_ ...

A review of the ledger of oriole company at december 31

A review of the ledger of Oriole Company at December 31, 2017, produces these data pertaining to the preparation of annual adjusting entries. 1. Prepaid Insurance $19,404. The company has separate insurance policies on i ...

Advanced financial accounting assignment -assessment task

Advanced Financial Accounting Assignment - Assessment Task Part A - In an article entitled 'Unwieldy rules useless for investors' that appeared in the Australian Financial Review on 6 February 2012 (by Agnes King), the f ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As