80.2K

Verified Solution

Link Copied!

No handwriting

Problem 2. (20 points) A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Required: 1. Assume the company uses Variable Costing system, calculate the unit product cost. 2. Assume the company uses Absorption Costing system, calculate the unit product cost. 3. Assume the company uses Variable Costing system, calculate the Income Statement. 4. Assume the company uses Absorption Costing system, calculate the Income Statement. 5. What causes the difference in NOI for Variable Costing and Absorption Costing? Be specific by using numbers and words to show how the difference occur. Process Costing template sicr 1. Laicuiate tquivalent units of production STEP 3. Calculate the Cost of ending work in process inventory and cost of units transterred out. ACC 202 CHAPTER 6 COST-VOLUME-PROFIT ANALYSIS (CVP) \begin{tabular}{|c|c|} \hline \begin{tabular}{l} Contribution Margin Format Income \\ Statement: \end{tabular} & Contribution Margin Income St in Equation form is: \\ \hline \begin{tabular}{l} Sales \\ Total Variable Costs (TVC) \\ Total Contribution Margin (TCM) \\ Fixed Costs (FC) \\ Net Operating Income (Profits) \end{tabular} & \begin{tabular}{l} NOI (Profits) = Sales - Total VC FC \\ OR \\ NOI (Profits) =(PQ)(VCQ)FC \\ NOI (Profits) =[(PVC)Q]FC \\ NOI (Profits) =[CMQ]FC \\ OR \\ NOI (Profits) =[CM Ratio Sales ]FC \end{tabular} \\ \hline If Question asks for: & Use formula: \\ \hline \begin{tabular}{l} For every unit, what is the marginal \\ profit? \end{tabular} & [1] Contribution Margin per unit =[PVC] \\ \hline \begin{tabular}{l} What is the increase in Profits, if Sales \\ increase by $1,000 ? \end{tabular} & \begin{tabular}{l} [2] Contribution Margin Ratio =CM Ratio =P[PVC] \\ Increase in Profits =CM%x increase in sales \end{tabular} \\ \hline What is the Break-even in units? & [3] BE in units =(CMperunit)FC \\ \hline What is Break-even in sales ($)? & [4] BE in $=(CMRatio)FC \\ \hline \begin{tabular}{l} How many units needed for Target \\ Profit (TOP)? \end{tabular} & [5] TOP in units =(CMperunit)(FC+TOP) \\ \hline \begin{tabular}{l} What Sales are needed for Target Profit \\ (TOP)? \end{tabular} & [6] TOP in $=(CMRatio)(FC+TOP) \\ \hline What is the Margin of Safety in $ ? & [7] [(Total budgeted or current Sales) - (BE \$ Sales)] \\ \hline What is the Margin of Safety in \%? & (TotalbudgetedorcurrentSales)[8][(TotalbudgetedorcurrentSales)(BE$Sales)] \\ \hline \begin{tabular}{l} What is the Degree of Operating \\ Leverage (DOL)? \end{tabular} & [9] DOL=NOITotalContributionMargin \\ \hline \begin{tabular}{l} What is the increase in Profits (NOI) if \\ Sales increase by 10% ? \end{tabular} & [10] Change in NOI=DOL[% Change in Sales] \\ \hline \end{tabular}

Answer & Explanation Solved by verified expert

See Answer