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Exercise 7-1 Variable and Absorption Costing Unit Product Costs (L07-1) Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $846. Selected data for the company's operations last year follow: 0 16,000 13,000 3,000 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per uniti Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed contat Fixed manufacturing overhead Pixed selling and administrative $ $ 180 450 55 18 $ $810,000 SGRO,000 Required: 1. Assume that the company uses absorption costing, Compute the unit product cost for one gamelan. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) 2. Assume that the company uses varloble costing. Compute the unit product cost for one gamelan. Answer is complete but not entirely correct. 1 2 Absorption conting unit product cost Variable costing unit product cost $ 7463 $ 688 Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: $ Variable costa per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed conts per year: Tixed manufacturing overhead Fixed selling and administrative 3 1 1 $290,000 $200,000 at During the year, the company produced 29,000 units and sold 22,000 units. The selling price of the company's product is $42 per unit. nt ences Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing a. Compute the unit product cost. b. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Red 1A Reg 18 REGRA Reg 28 Compute the unit product cost. Assume that the company uses absorption costing. Unit productos Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $990. Selected data for the company's operations last year follow: 0 250 230 20 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per uniti Direct materials Direct labor Variable manufacturing overbend Variable selling and administrative Fixed costs: Fixed manufacturing overhead Fixed selling and administrative $ $ $ $ 145 365 40 25 $ 65,000 $ 29,000 The absorption costing income statement prepared by the company's accountant for last year appears below: Sales Cost of goods sold Gross margin Selling and administrative expenne Net operating income $ 227,700 186,300 41,400 34,250 5 6,650 Required: 1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. Prepare an Income statement for last year using variable costing. What is the amount of the difference in net operating Income between the two costing methods? Complete this question by entering your answers in the tabs below. Royal Lawncare Company produces and sells two packaged products-Weedban and Greengrow. Revenue and cost information relating to the products follow. Product Weedban Greengrow $ $ 38.00 $ 2.20 $ 13.00 $ 131,000 $ 49,000 Selling price per unit Variable expenses per unit Traceable fixed expenses per year 9.00 Common fixed expenses in the company total $111.000 annually. Last year the company produced and sold 37,000 units of Weedban and 22,500 units of Greengrow. Required: Prepare a contribution format income statement segmented by product lines, Product Line Total Company Weedban Greengrow Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices -one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Assume that Minneapolis' sales by major market are: Sales Variable expenses Contribution margin Traceable fixed expenses Market segment margin Common fixed expenses not traceable to markets office segment margin Market Minneapolis Medical Dental $810,000 1008 $540,000 1001 $270,000 1000 486,000 600 351,000 658 135,000 503 324,000 400 189,000 350 135,000 501 97,200 120 27.000 5t 70,200 26 226,800 284 $162,000 30# $ 64,800 240 24,300 $202,500 31 250 The company would like to initiate an intensive advertising campaign in one of the two market segments during the next month. The campaign would cost $10,800. Marketing studies indicate that such a campaign would increase sales in the Medical market by $94.500 or increase sales in the Dental market by $81,000, Required: 1. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? 2. How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Dental Market? 3. In which of the markets would you recommend that the company focus its advertising campaign? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much would the company's profits increase (decrease) if it implemented the advertising campaign in the Medical Market? Company's profits Piedmont Company segments its business into two regions-North and South. The company prepared the contribution format segmented income statement as shown: Sales Variable expenses Contribution margin Traceable fixed expenses Segment margin Common fixed expenses Net operating income Total Company $ 600,000 360,000 240,000 132,000 108,000 56,000 $ 52,000 North $ 400,000 280,000 120,000 66,000 $ 54,000 South $ 200,000 80,000 120,000 66,000 $ 54,000 Required: 1. Compute the companywide break-even point in dollar sales 2. Compute the break-even point in dollar sales for the North region. 3. Compute the break-even point in dollar sales for the South region. (For all requirements, round your Intermediate calculations to 2 decimal places, Round your final answers to the nearest dollar) 1. Dollar sales for company to break even 2. Dollar sales for North segment to break-even 3. Dollar sales for South segment to break-even

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