Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells25,125 tons of its granular. Because of this year's mild winter, projected demand for its product is only 20.100 tons. Based on projectedproduction and sales of 20.100 tons, the company estimates the following income using absorption costing.Sales (20,100 tons at $148 per ton)Cost of goods sald (20,100 tons at 360 per ton)Gross profitSelling and administrative expensesIncomeIts product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensiveequipmentDirect materialsDirect laborVariable overheadFixed overhead ($884,098/28,100 tons)Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling andadministrative expenses of $213,400 per year. The company's president will not earn a bonus unless a positive income is reported.The controller mentions that because the company has large storage capacity, it can report a positive income by setting production atthe usual 25,125 ton level even though it expects to sell only 20.100 tons. The president is surprised that the company can reportincome by producing more without increasing sales.Required:1. Prepare an income statement using absorption costing based on production of 25,125 tons and sales of 20,100 tons. Can thecompany report a positive income by increasing production to 25,125 tons and storing the 5,025 tons of excess production inInventory?2. By how much does income increase by when producing 25,125 tons and storing 5,025 tons in inventory compared to onlyproducing 20,100 tons?Required 1Required 2Complete this question by entering your answers in the tabs below.BLAZER CHEMICALIncome Statement (Absorption Costing)SalesCost of goods soldGross profitSelling general and administrative expensesIncomePrepare an income statement using absorption costing based on production of 25,125 tons and sales of 20,100 tons. Can thecompany report a positive income by increasing production to 25,125 tons and storing the 5,025 tons of excess production ininventory?Note: Round your answers to the nearest whole dollar.Did the company report a positive income?$ 1,540,0001,206,000394,090334,030$8$ 13 per ton$4 per ton$3 per ton5 48 per tonRequired 1 Required 2SAnswer is not complete.Increase in incomeYes100Complete this question by entering your answers in the tabs below.Answer is not complete.By how much does income increase by when producing 25,125 tons and storing 5,025 tons in inventory compared to onlyproducing 20,100 tons?Show less# 15

Absorption costing income statement is the traditional method of representation of income statement.…

Answered: Blazer Chemical produces and sells an…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 4EB: Roper Furniture manufactures office furniture and tracks cost data across their process. The...

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Markham Farms reports the following contribution margin income statement for the month of August. The company has the opportunity to purchase new machinery that will reduce its variable cost per unit by $2 but will increase fixed costs by 15%. Prepare a projected contribution margin income statement for Markham Farm assuming it purchases the new equipment. Assume sales level remains unchanged.
Roper Furniture manufactures office furniture and tracks cost data across their process. The following are some of the costs that they incur. Classify these costs as fixed or variable costs, and as product costs or period costs. Wood used to produce desks ($125,00 per desk) Production labor used to produce desks ($15 per hour) Production supervisor salary ($45,000 per year) Depreciation on factory equipment ($60,000 per year) Selling and administrative expenses ($45,000 per year) Rent on corporate office ($44,000 per year) Nails, glue, and other materials required to produce desks (varies per desk) Utilities expenses for production facility Sales staff commission (5% of gross sales)
Blazer Chemical produces and sells an Ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 19,000 tons of its granular. Because of this year's mild winter, projected demand for its product is only 15,200 tons. Based on projected production and sales of 15,200 tons, the company estimates the following income using absorption costing. Sales (15,200 tons at $80 per ton) Cost of goods sold (15,288 tons at $60 per ton) Gross profit Selling and administrative expenses) Incone $ 1,216,000 912,000 304,000 384,000 $0 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials Direct labor Variable overhead $13 per ton $ 4 per ton Fixed overhead ($608,000/15,200 tons). $3 per ton $40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $212,800 per year.…
Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 21,750 tons of its granular. Because of this year's mild winter, projected demand for its product is only 17,400 tons. Based on projected production and sales of 17,400 tons, the company estimates the following income using absorption costing. Sales (17,400 tons at $112 per ton) Cost of goods sold (17,400 tons at $60 per ton) Gross profit Selling and administrative expenses Income Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials Direct labor $ 1,360,000 1,044,000 316,000 316,000 $0 Variable overhead. Fixed overhead ($696,000/17,400 tons) $ 13 per ton $ 4 per ton $ 3 per ton $40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $211,600 per…
Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 21,000 tons of its granular. Because of this year's mild winter, projected demand for its product is only 16,800 tons. Based on projected production and sales of 16,800 tons, the company estimates the following income using absorption costing. Sales (16,800 tons at $80 per ton) Cost of goods sold (16,800 tons at $60 per ton) Gross profit Selling and administrative expenses Income $ 1,344,000 1,008,000 336,000 336,000 $ 0 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials Direct labor Variable overhead Fixed overhead ($672,000/16,800 tons) $ 13 per ton $ 4 per ton $ 3 per ton $ 40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $235,200 per…
es Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 21,125 tons of its granular. Because of this year's mild winter, projected demand for its product is only 16,900 tons. Based on projected production and sales of 16,900 tons, the company estimates the following income using absorption costing. Sales (16,900 tons at $80 per ton) $ 1,352,000 Cost of goods sold (16,900 tons at $60 per 1,014,000 ton) Gross profit Selling and administrative expenses Income 338,000 338,000 $ 0 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials Direct labor Variable overhead Fixed overhead ($676,000/16,900 tons) $ 13 per ton $ 4 per ton $ 3 per ton $ 40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $236,600…
Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 20,000 tons of its granular. Because of this year's mild winter, projected demand for its product is only 15,000 tons. Based on projected production and sales of 15,000 tons, the company estimates the following income using absorption costing. Sales (15,000 tons at $80 per ton) Cost of goods sold (15,000 tons at $60 per ton) Gross profit Selling and administrative expenses Income Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials. Direct labor Variable overhead Fixed overhead ($600,000/15,000 tons) Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $210,000 per year. The company's president will not earn a bonus unless a positive income is reported.…
Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 20,000 tons of its granular. Because of this year’s mild winter, projected demand for its product is only 15,000 tons. Based on projected production and sales of 15,000 tons, the company estimates the following income using absorption costing. Sales (15,000 tons at $80 per ton) $ 1,200,000 Cost of goods sold (15,000 tons at $60 per ton) 900,000 Gross profit 300,000 Selling and administrative expenses 300,000 Income $ 0 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials $ 13 per ton Direct labor $ 4 per ton Variable overhead $ 3 per ton Fixed overhead ($600,000/15,000 tons) $ 40 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative…
Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 42,000 tons of its granular. Because of this year’s mild winter, projected demand for its product is only 35,000 tons. Based on projected production and sales of 35,000 tons, the company estimates the following income using absorption costing. Sales (35,000 tons at $129 per ton) $ 4,515,000 Cost of goods sold (35,000 tons at $96 per ton) 3,360,000 Gross profit 1,155,000 Selling and administrative expenses 1,155,000 Income $ 0 Its product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensive equipment. Direct materials $ 12 per ton Direct labor $ 12 per ton Variable overhead $ 6 per ton Fixed overhead ($2,310,000/35,000 tons) $ 66 per ton Selling and administrative expenses consist of variable selling and administrative expenses of $11 per ton and fixed selling and…
Vernon Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs $5,700 6,500 3,200 8,400 27,100 *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Vernon for $2.60 each. Required a. Calculate the total relevant cost. Should Vernon continue to make the containers? b. Vernon could lease the space it currently uses in the manufacturing process. If leasing would produce $12,700 per month, calculate the total avoidable costs. Should Vernon continue to make the containers? a. Total relevant cost a. Should Vernon continue to make the containers? b. Total avoidable cost b. Should Vernon continue to make the containers?
Rundle Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,300 containers follows. Unit-level materials. Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Rundle for $2.60 each. Required a. Calculate the total relevant cost. Should Rundle continue to make the containers? b. Rundle could lease the space it currently uses in the manufacturing process. If leasing would produce $11,600 per month, calculate the total avoidable costs. Should Rundle continue to make the containers? Answer is complete but not entirely correct. $ a. Total relevant cost a. Should Rundle continue to make the containers? b. Total avoidable cost b. Should Rundle continue to make the containers? 190.650,000 Yes $24,180,000 $ 5,200 6,100 4,000 7,800…
Baird Electronics currently produces the shipping containers it uses to deliver the electronics products it sells. The monthly cost of producing 9,100 containers follows. $ 6,500 6,400 4,100 9,600 27,900 Unit-level materials Unit-level labor Unit-level overhead Product-level costs* Allocated facility-level costs *One-third of these costs can be avoided by purchasing the containers. Russo Container Company has offered to sell comparable containers to Baird for $2.60 each. Required a. Calculate the total relevant cost. Should Baird continue to make the containers? b. Baird could lease the space it currently uses in the manufacturing process. If leasing would produce $11,200 per month, calculate the total avoidable costs. Should Baird continue to make the containers? a. Total relevant cost Should Baird continue to make the containers? b. Total avoidable cost Should Baird continue to make the containers?

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