The vice-president for sales of Huber Corporation has received the following income statement for November, which was prepared on a variable-costing system. The firm has just adopted variable costing for its internal reporting. HUBER CORPORATION Income Statement For the Month of November (in thousands) Sales $2,400 Less variable cost of goods sold 1,200 Contribution margin 1,200 Less fixed manufacturing costs at budget 600 Gross margin 600 Less fixed selling and administrative costs 400 Net income before taxes $200 The controller attached the following notes with the statements: 1. The unit sales price for November averaged $24. 2. The unit manufacturing costs for the month were as follows: Variable costs Fixed costs applied Total cost $12 4 $16 3. 4. The unit rate for fixed manufacturing costs is a predetermined rate based on a monthly production of 150,000 units. The variable costs per unit have been stable all year. 5. Production for November was 45,000 units in excess of sales. 6. The inventory at November 30 was 80,000 units. (a) The vice-president for sales is not comfortable with the variable-costing system and wonders what the net income would have been under the previous absorption-costing system. 1. Present the November income statement on an absorption-costing basis. HUBER CORPORATION Absorption-Costing Income Statement Sales in units November 30, 2020For the Month Ended November 30, 2020For the Year Ended November 30, SalesGross ProfitSelling and Administrative CostsCost of Goods Sold Net Income / (Loss) Net Inco AddLess: Manufacturing Overhead Contribution MarginNet In Cost of Goods SoldNet Income Before Overhead AdjustmentOperating ExpensesCost of Goods AddLess: Gross ProfitOverhead Adjustment Net Income Before Gross ProfitSelling and Administrative CostsNet Income/ (Loss)Net Income Before Overhead Adj AddLess: Selling and Administrative CostsSalesNet Income/ (L Cost of Goods SoldGross Profit Cost of Goods Manufactured SalesCost of Goods Available for Sale 2. Reconcile and explain the difference between the variable-costing and absorption-costing net income figures. Variable-costing net income FMOH deferred in ending inventory FMOH released from beginning inventory Absorption-costing net income $

The vice-president for sales of Huber Corporation has received the following income statement for November, which was prepared on a variable-costing system. The firm has just adopted variable costing for its internal reporting. HUBER CORPORATION Income Statement For the Month of November (in thousands) Sales $2,400 Less variable cost of goods sold 1,200 Contribution margin 1,200 Less fixed manufacturing costs at budget 600 Gross margin 600 Less fixed selling and administrative costs 400 Net income before taxes $200 The controller attached the following notes with the statements: 1. The unit sales price for November averaged $24. 2. The unit manufacturing costs for the month were as follows: Variable costs Fixed costs applied Total cost $12 4 $16 3. 4. The unit rate for fixed manufacturing costs is a predetermined rate based on a monthly production of 150,000 units. The variable costs per unit have been stable all year. 5. Production for November was 45,000 units in excess of sales. 6. The inventory at November 30 was 80,000 units. (a) The vice-president for sales is not comfortable with the variable-costing system and wonders what the net income would have been under the previous absorption-costing system. 1. Present the November income statement on an absorption-costing basis. HUBER CORPORATION Absorption-Costing Income Statement Sales in units November 30, 2020For the Month Ended November 30, 2020For the Year Ended November 30, SalesGross ProfitSelling and Administrative CostsCost of Goods Sold Net Income / (Loss) Net Inco AddLess: Manufacturing Overhead Contribution MarginNet In Cost of Goods SoldNet Income Before Overhead AdjustmentOperating ExpensesCost of Goods AddLess: Gross ProfitOverhead Adjustment Net Income Before Gross ProfitSelling and Administrative CostsNet Income/ (Loss)Net Income Before Overhead Adj AddLess: Selling and Administrative CostsSalesNet Income/ (L Cost of Goods SoldGross Profit Cost of Goods Manufactured SalesCost of Goods Available for Sale 2. Reconcile and explain the difference between the variable-costing and absorption-costing net income figures. Variable-costing net income FMOH deferred in ending inventory FMOH released from beginning inventory Absorption-costing net income $

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...

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