Managerial Accounting

Managerial Accounting - Practice 2

Student: ___________________________________________________________________________

1. Lehne Company, which has only one product, has provided the following data concerning its most recent month of operations:

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

Required:

a. What is the unit product cost for the month under variable costing?

b. What is the unit product cost for the month under absorption costing?

c. Prepare an income statement for the month using the contribution format and the variable costing method.

d. Prepare an income statement for the month using the absorption costing method.

e. Reconcile the variable costing and absorption costing net operating incomes for the month.

2. The Dean Company produces and sells a single product. The following data refer to the year just completed:

Assume that direct labor is a variable cost.

Required:

a. Compute the cost of a single unit of product under both the absorption costing and variable costing approaches.

b. Prepare an income statement for the year using absorption costing.

c. Prepare an income statement for the year using variable costing.

d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.

3. Spencer Company's most recent monthly contribution format income statement is given below:

The company sells its only product for $10 per unit. There were no beginning or ending inventories.

Required:

a. What are total sales in dollars at the break-even point?

b. What are total variable expenses at the break-even point?

c. What is the company's contribution margin ratio?

d. If unit sales were increased by 10% and fixed expenses were reduced by $2,000, what would be the company's expected...