Question

Gibson Manufacturing pays its production managers a bonus based on the company's profitability. During the two most recent years, the company maintained the same cost structure to manufacture its products. Units Produced Units Sold 4,000 6,000 4,000 4,000 eBook Year Production and Sales 2018 2019 Cost Data Direct materials Direct labor Manufacturing overheadvariable Manufacturing overheadfixed Variable selling and administrative expenses Fixed selling and administrative expenses $ 13.2 per unit $ 23.5 per unit $ 10.3 per unit $106, 200 Print $ 8.6 per unit sold Ferences $ 55,000 (Assume that selling and administrative expenses are associated with goods sold.) Levine sells its products for $108.1 per unit. Required a. Prepare income statements based on absorption costing for 2018 and 2019. b. Since Levine sold the same number of units in 2018 and 2019, why did net income increase in 2019? d. Determine the costs of ending inventory for 2019. e. Prepare income statements based on variable costing for 2018 and 2019. Complete this question by entering your answers in the tabs below. Req A 2018 Req A 2019 Req B ReqD Req E 2018 Req E 2019

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Answer 1

@ Gniome statement for 2018 2019 y based on Absorptio (esting method _ 34 - mujo ) Partimare- 2018_ 2014 Units produced 4000 4000 Units GODD 4000. sold . 4000 400 Produtien (pst. Direct material 52800 9200 Direct Labour dana - 19 94000 141000 Variable manufacturing oH 41200 61800 Fixed manufacturing OH 1 06200106200 COST OF PRODUCTION 2942001388200 (- Closing - stock of finished goods 388200 - 6000 (129400 COST OF GOODS SOLD H 294200 A 258800 + Administration of Selling expense akne - - Variable 34400 34400 - Fixed 55000 55000 TOTAL COST 3 83600348200 + Profit #( balancing fig). 48800 84200 SALES ( 108.) peyunit) 1 432400432400

(6). There is inmease in the net income of 2019 because the total cost in 2019 is lower $35400 There is seduction in total cost becaus of the existence of closing stock of 2000 units is 2019 (C). Closing stock cost of 2019 . nonas cost of production 388200 de Tho ? X units GOLD DDD and Card OD 1388200 X 2000 : 6000 = $129400 A bout Us Contact ༡། 21 2 ང ༽ ན ་] ༤ ་༡ བལ་ རབ་ རུབྱེད། ༣ ནད་ cocon c r oit intrat

(6) Income Statement using Variable costing! method article and teacht Partiulars 2018 2019 Units Units produced sold 4000 4000 6000 4000 Sales 575M (A) 432400432400 (-) Variable manufacturing cost Diret material 52800 79200 Direct Labour 94000 14+1000 Variable manufacturing cost 61800 COST OF GOODS PRODUCED. 188000 282000 (94000) (-) Closing stock of Finished good 232000 6000 x 2000 COST OF GOODS SOLD Add: Variable administration & - selling expense 188 ODD 188000 34400 34400 TOTAL VARIABLE COST(B) 222.400 222400 210,000 Contribution (A - B) 210000 Fixed cost - Manufacturing exp. 106200 - Administration of selling _55000 Net Profit P 1 48800 106200 55000 48800 exp

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