Required:1. Prepare an income statement using absorption costing based on production of 21,750 tons and sales of 17,400 tons. Can thecompany report a positive income by increasing production to 21,750 tons and storing the 4,350 tons of excess production ininventory?2. By how much does income increase by when producing 21,750 tons and storing 4,350 tons in inventory compared to onlyproducing 17,400 tons?Complete this question by entering your answers in the tabs below.Required 1 Required 2Prepare an income statement using absorption costing based on production of 21,750 tons and sales of 17,400 tons. Can thecompany report a positive income by increasing production to 21,750 tons and storing the 4,350 tons of excess production inInventory? (Round your answers to the nearest whole dollar.)BLAZER CHEMICALIncome Statement (Absorption Costing)Did the company report a positive income?$00Required 2 > Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells21,750 tons of its granular. Because of this year's mild winter, projected demand for its product is only 17,400 tons. Based on projectedproduction 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 $60 per ton)Gross profitSelling and administrative expensesIncomeIts product cost per ton follows and consists mainly of fixed overhead because its automated production process uses expensiveequipment.Direct materialsDirect labor$ 1,360,0001,044,000316,000316,000$0Variable overhead.Fixed overhead ($696,000/17,400 tons)$ 13 per ton$ 4 per ton$ 3 per ton$40 per tonSelling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling andadministrative expenses of $211,600 per year. The company's president will not earn a bonus unless a positive income is reported. Thecontroller mentions that because the company has large storage capacity, it can report a positive income by setting production at theusual 21,750 ton level even though it expects to sell only 17,400 tons. The president is surprised that the company can report incomeby producing more without increasing sales.Required:1. Prepare an income statement using absorption costing based on production of 21,750 tons and sales of 17,400 tons. Can thecompany report a positive income by increasing production to 21,750 tons and storing the 4,350 tons of excess production ininventory?2. By how much does income increase by when producing 21,750 tons and storing 4,350 tons in inventory compared to onlyproducing 17,400 tons?

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

Answered: Required: 1. Prepare an income…

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter10: Cost Analysis For Management Decision Making

Section: Chapter Questions

Problem 18E

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Using the information in the previous exercises about Marleys Manufacturing, determine the operating income for department B, assuming department A sold department B 1,000 units during the month and department A reduces the selling price to the market price.
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)
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Blazer Chemical produces and sells an ice-melting granular used on roadways and sidewalks in winter. It annually produces and sells 25,125 tons of its granular. Because of this year's mild winter, projected demand for its product is only 20.100 tons. Based on projected production 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 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 ($884,098/28,100 tons) Selling and administrative expenses consist of variable selling and administrative expenses of $6 per ton and fixed selling and administrative expenses of $213,400 per year. The company's president will not earn a bonus unless a positive income is reported. The…
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 21,000 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…
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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…
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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…
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…

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