CBA is a division of Flynn, Inc. The division manufactures and sells a pump that...
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Accounting
CBA is a division of Flynn, Inc. The division manufactures and sells a pump that is used in a wide variety of applications. During the coming year, it expects to sell 30,000 units for $25 per unit. Raad Ali, division manager, is considering producing either 30,000 or 40,000 units during the period. Other information is presented in the schedule below:
Division Information 2016
Beginning inventory
0
Expected sales in units
30,000
Selling price per unit
$25
Variable manufacturing cost per unit
$7
Fixed manufacturing overhead costs (total)
$480,000
Fixed manufacturing overhead costs per unit
----
Based on 30,000 units ($480,000 30,000)
$16
Based on 40,000 units ($480,000 40,000)
$12
Manufacturing cost per unit
-----
Based on 30,000 units ($7 variable + $16 fixed)
$23
Based on 40,000 units ($7 variable + $12 fixed)
$19
Selling and administrative expenses (all fixed)
$25,000
Instructions
Prepare a variable costing income statement with one column showing the results if 30,000 units are produced and one column showing the results if 40,000 units are produced.
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