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Chapter 21: Q13SE (page 1170)

Using absorption and variable costing

Meyer Company reports the following information for March:

Net Sales Revenue $ 45,300

Variable Cost of Goods Sold 12,500

Fixed Cost of Goods Sold 11,800

Variable Selling and Administrative Costs 14,000

Fixed Selling and Administrative Costs 5,400

Requirements:

  1. Calculate the gross profit and operating income for March using absorption costing.
  2. Calculate the contribution margin and operating income for March using variable costing.

Short Answer

Expert verified

Answer

  1. Gross profit is $21,000 and operating income is $1,600.
  2. Contribution margin is $18,800 and operating income is $1,600.

Step by step solution

01

Calculation of gross profit using absorption costing

Particulars

Amount

Net sales revenue

$45,300

Less: Cost of goods sold

Variable cost of goods sold

$12,500

Fixed cost of goods sold

$11,800

Gross profit

$21,000

Less: Selling and administrative cost

Variable selling and administrative cost

$14,000

Fixed selling and administrative cost

$5,400

Operating Income

$1,600

02

Calculation of gross profit using variable costing

Particulars

Amount

Net sales revenue

$45,300

Less: Variable costs

Variable cost of goods sold

$12,500

Variable selling and administrative cost

$14,000

Contribution margin

$18,800

Less: Fixed costs

Fixed costs of goods sold

$11,800

Fixed selling and administrative cost

$5,400

Operating Income

$1,600

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Most popular questions from this chapter

Calculating contribution margin and operating income, variable costing

Calculate the contribution margin and operating income for June using variable costing.

Use the following information for Short Exercises S21-4 and S21-5.

Dracut Company reports the following information for June:

Net Sales Revenue $ 755,000 Variable Cost of Goods Sold 240,000 Fixed Cost of Goods Sold 198,000 Variable Selling and Administrative Costs 168,000 Fixed Selling and Administrative Costs 79,000

Computing unit product cost, absorption costing Calculate the unit product cost using absorption costing. Round your answer to the nearest cent.

Use the following information for Short Exercises S21-2 and S21-3.

Martin Company had the following costs:

Units produced 320 units Direct materials $ 71 per unit Direct labor 40 per unit Variable manufacturing overhead 13 per unit Fixed manufacturing overhead 7,360 per year Variable selling and administrative costs 22 per unit

Fixed selling and administrative costs 1,920 per year

Analyzing profitability analysis, service company Burlington Internet Services is an Internet service provider for commercial and residential customers. The company provided the following data for its two types of customers for the month of August:

For each type of customer, determine both the contribution margin per customer and the contribution margin ratio. Round to two decimal places.

Which type of service is more profitable?

How are absorption costing and variable costing the same? How are they different?

Calculating gross profit and operating income, absorption costing Calculate the gross profit and operating income for June using absorption costing

Use the following information for Short Exercises S21-4 and S21-5.

Dracut Company reports the following information for June:

Net Sales Revenue $ 755,000 Variable Cost of Goods Sold 240,000 Fixed Cost of Goods Sold 198,000 Variable Selling and Administrative Costs 168,000 Fixed Selling and Administrative Costs 79,000
See all solutions

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