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Textbook:
Horngren’s Cost Accounting – A Managerial EmphasisAUTHOR: Datar & RojanPublisher: PearsonLink: ISBN: 978-0-13-342870-4Textbook: Horngren’s Cost Accounting – A Managerial Emphasis
AUTHOR: Datar & Rojan
Publisher: Pearson
ISBN: 978-0-13-342870-4
Valentine produces jet bridges for many domestic and international airports. Cost information for Valentine’s jet bridg
Variable cost per jet bridge:
Materials
Labor
Selling
Fixed costs for the first 3 quarters of 2020:
Selling
\$
\$
\$
\$
\$
\$
\$
\$
5,900
3,500
700
900
800
856,950 allocated based on budgeted production
530,000
715,000
Additional information for the first three quarters of 2020 for Valentine are shown below:
1st Quarter
Budgeted production
Actual production
Sales
Sales price: \$40,000 per jet bridge
Fixed selling costs by quarter
Fixed G&A costs by quarter
1
2
3
4
5
6
64
64
59
2nd Quarter
68
68
61
180,000
335,000
180,000
190,000
3rd Quarter
65
65
57
170,000
190,000
Requirements
Prepare an absorption costing income statement
Prepare a variable costing income statement
Prepare a throughput costing income statement
Explain the difference in the net income under each costing method.
Based on the information​ provided, which costing method do you believe Valentine is currently using to calculate the bonus for
If Q4 sales were 68 and Q4 actual and budgeted production was 53, what difference would you expect in Q4 income between
Valentine’s controller, Matt, wishes to analyze the difference in the income statements between throughput costing, ab
quarters of 2020 . Assume no beginning inventory.
Requirement 1. Prepare an absorption costing income statement. ​(Complete all input fields. Enter a 0 for any zero balance ac
Abbreviation​ used: DM​ = direct​ materials; SG&A​ = selling, general and​ administrative.)
Aborption Costing:
1st Quarter
2nd Quarter
Revenues
Cost of goods sold availble for sale
Net income (loss)
Requirement 2. Prepare a variable costing income statement.(Complete all input fields. Enter a 0 for any zero balance accoun
Variable Costing:
1st Quarter
2nd Quarter
Revenues
Cost of goods sold availble for sale
Net income (loss)
Requirement 3. Prepare a throughput costing income statement. ?(Complete all input fields. Enter a 0 for any zero balance ac
Throughput Costing:
1st Quarter
2nd Quarter
Revenues
Cost of goods sold availble for sale
Net income (loss)
Requirement 4. Explain the difference in the net income under each costing method.
The ___________ costing method absorbs the most costs into inventory, followed by the
between the three quarters, the ___________ costing method results in the highest amount of net income, followed by the
Requirement 5. Based on the information? provided, which costing method do you believe is currently using to calculate the b
Based on the information provided, Balentine ios likely using the
costing method to calculate the bonus for
Requirement 6. If Q4 sales were and Q4 actual and budgeted production was ?, what difference would you expect in Q4 inco
If Q4 sales are 68 and Q4 production is 53, ending inventory would
At a fixed manufacturing cost per unit of
Calculate with absorption costing to be
by
, we would expect net income
than variable costing.
nformation for Valentine’s jet bridges is as follows:
budgeted production
elow:
ently using to calculate the bonus for the production manager? Why?
d you expect in Q4 income between absorption costing and variable costing
nts between throughput costing, absorption costing, and variable costing for the first 3
ds. Enter a 0 for any zero balance accounts. Use a minus sign or parentheses for a net loss.
2nd Quarter
3rd Quarter
nter a 0 for any zero balance accounts. Use a minus sign or parentheses for a net loss.)
2nd Quarter
3rd Quarter
ds. Enter a 0 for any zero balance accounts. Use a minus sign or parentheses for a net? loss.)
2nd Quarter
3rd Quarter
costing method absorbing the least amount of costs into inventory. As a result, based on our scenario here where ending inv
unt of net income, followed by the
costing method, with the
costing method resulting in the lowest amount of ne
e is currently using to calculate the bonus for the production? manager? Why?
ng method to calculate the bonus for the production manager because inventory is
ference would you expect in Q4 income between absorption costing and variable? costing? Why?
units.
variable costing.
each quarter with no credible reason. Using
n our scenario here where ending inventory is
d resulting in the lowest amount of net income for each of the three quarters.
with no credible reason. Using
costing will increase net income by the amount of
costs absorbed into inventory, thus pro
costs absorbed into inventory, thus providing the managers with a higher bonus.

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