CBA is a division of Flynn, Inc. The division manufactures and sells a pump that...
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CBA is a division of Flynn, Inc. The division manufactures and sells a pump that is used in a wide variety of applications. During the coming year, it expects to sell 30,000 units for $25 per unit. Raad Ali, division manager, is considering producing either 30,000 or 40,000 units during the period. Other information is presented in the schedule below:
Division Information 2016
Beginning inventory0
Expected sales in units30,000
Selling price per unit$25
Variable manufacturing cost per unit$7
Fixed manufacturing overhead costs (total)$480,000
Fixed manufacturing overhead costs per unit
Based on 30,000 units ($480,000 30,000)$16
Based on 40,000 units ($480,000 40,000)$12
Manufacturing cost per unit
Based on 30,000 units ($7 variable + $16 fixed)$23
Based on 40,000 units ($7 variable + $12 fixed)$19
Selling and administrative expenses (all fixed)$25,000
Instructions
Prepare a variable costing income statement with one column showing the results if 30,000 units are produced and one column showing the results if 40,000 units are produced.
CBA is a division of Flynn, Inc. The division manufactures and sells a pump that is used in a wide variety of applications. During the coming year, it expects to sell 30,000 units for $25 per unit. Raad Ali, division manager, is considering producing either 30,000 or 40,000 units during the period. Other information is presented in the schedule below:
Division Information 2016
Beginning inventory0
Expected sales in units30,000
Selling price per unit$25
Variable manufacturing cost per unit$7
Fixed manufacturing overhead costs (total)$480,000
Fixed manufacturing overhead costs per unit
Based on 30,000 units ($480,000 30,000)$16
Based on 40,000 units ($480,000 40,000)$12
Manufacturing cost per unit
Based on 30,000 units ($7 variable + $16 fixed)$23
Based on 40,000 units ($7 variable + $12 fixed)$19
Selling and administrative expenses (all fixed)$25,000
Instructions
Prepare a variable costing income statement with one column showing the results if 30,000 units are produced and one column showing the results if 40,000 units are produced.
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