Cost Accounting 9-20

Income Statement for the Zwatch Company, Variable Costing | |

for the Year Ended December 31, 2007 | |

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Revenues: | $ 7,598,800.00 |

Variable costs | |

Beginning inventory: | 85,000 |

Variable manufacturing costs: | $ 5.10 |

Cost of goods available for sale | $ 433,500.00 |

Deduct ending inventory: | $ 175,950.00 |

Variable cost of goods sold | $ 1.10 |

Variable operating costs: | $ 379,940.00 |

Adjustment for variances | |

Total variable costs | $ 637,490.00 |

Contribution margin | $ 6,961,310.00 |

Fixed costs | |

Fixed manufacturing overhead costs | $ 1,440,000.00 |

Fixed operating costs | $ 1,080,000.00 |

Total fixed costs | $ 2,520,000.00 |

Operating income | $ 4,441,310.00 |

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Absorption Costing Data | |

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Fixed manufacturing overhead allocation rate = | $ 2,520,000.00 |

Fixed manufacturing overhead/Denominator level machine-hours = | $ 420.00 |

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Fixed manufacturing overhead allocation rate per unit = | $ 7.30 |

Fixed manufacturing overhead allocation rate/standard production rate = | $ 8.40 |

Income Statement for the Zwatch Company, Absorption Costing | | | | | | | | | | |

for the Year Ended December 31, 2007 | | | | | | | | | | |

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Revenues: | | | | | | | | | | |

Cost of goods sold | $ 2,141,480.00 | | | | | | | | | |

Beginning inventory | $ 527,000.00 | | | | | | | | | |

Variable manuf. costs: | $ 1,761,540.00 | | | | | | | | | |

Allocated fixed manuf. costs: | $ 2,520,000.00 | | | | | | | | | |

Cost of goods available for sale | $ 2,668,480.00 | | | | | | | | | |

Deduct ending inventory: | $ 210,450.00 | | |...