The annual data that follows pertain to ShadyShady?, a manufacturer of swimming goggles? (the company had no beginning?...

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Question

Accounting

The annual data that follows pertain to
ShadyShady?,
a manufacturer of swimming goggles? (the company had nobeginning? inventory):
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Requirements
1.
Prepare both conventional? (absorption costing) andcontribution margin? (variable costing) income statements for
ShadyShady
for the year.
2.
Which statement shows the higher operating? income? Why?
3.
The company marketing vice president believes a new salespromotion that costs
$135,000
would increase sales to
205,000 goggles. Should the company go ahead with the?promotion? Give your reason.
Sales price. . . . . . . . . . . . . . . . . . . . . . . . . . .. .
$47
Variable manufacturing expense per unit. . . .
$19
Sales commission expense per unit. . . . . . . .
$12
Fixed manufacturing overhead. . . . . . . . . . .
$1,640,000
Fixed operating expenses. . . . . . . . . . . . . . .
$245,000
Number of goggles produced. . . . . . . . . . . . . .
205,000
Number of goggles sold. . . . . . . . . . . . . . . . . .
193,000
Shady
Income Statement (Absorption Costing)
For the Year Ended December 31
Less:
Less:
Operating expenses

Answer & Explanation Solved by verified expert

3.5 Ratings (540 Votes)

Requirement 1 Prepare the absorption costing income statement as follows S Inc Absorption Costing Income Statement For the Year Ended December 31 Particulars Amount Service revenue 193000 47 9071000 Cost of goods sold 193000 27 5211000 Gross profit 3860000 Operating expenses 193000 12 245000 2561000 Operating income 1299000 Notes See Answer

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