stion #5 (Instructions/Hint) Sunrise Pools and Spas manufactures fibreglass forms for in-ground pools and swim spas for all-season use. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the data for their swim spa business in years 1, 2, and 3 shown below. The company's fixed manufacturing overhead per unit was constant at $4,100 for all three years: Year 1 Year 2 Year 3 Inventories: Beginning (units) 170 230 170 Ending (units) Variable costing operating income 230 $294,000 170 $270,800 240 $253,400 Required: 1. Determine each year's absorption costing operating income. Present your answer in the form of a reconciliation report. Absorption Costing Operating Incomes Year 1 Year 2 Year 3 Variable costing operating income Add Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income 4

stion #5 (Instructions/Hint) Sunrise Pools and Spas manufactures fibreglass forms for in-ground pools and swim spas for all-season use. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the data for their swim spa business in years 1, 2, and 3 shown below. The company's fixed manufacturing overhead per unit was constant at $4,100 for all three years: Year 1 Year 2 Year 3 Inventories: Beginning (units) 170 230 170 Ending (units) Variable costing operating income 230 $294,000 170 $270,800 240 $253,400 Required: 1. Determine each year's absorption costing operating income. Present your answer in the form of a reconciliation report. Absorption Costing Operating Incomes Year 1 Year 2 Year 3 Variable costing operating income Add Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income 4

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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