Accounting homework help.
- Consider the following information:
| Q1 | Q2 | Q3 | |
| Beginning inventory (units) | 0 | H | 100 |
| Budgeted units to be produced | 25,000 | 25,000 | 25,000 |
| Actual units produced | 24,500 | 25,400 | O |
| Units sold | A | 25,600 | P |
| Variable manufacturing costs per unit produced | $10 | $10 | $10 |
| Variable selling costs per unit sold | $4 | $4 | $4 |
| Budgeted fixed manufacturing costs | $125,000 | $125,000 | $125,000 |
| Fixed selling costs | $25,000 | $25,000 | $25,000 |
| Selling price per unit | $25 | $25 | $25 |
| Variable costing operating income | $116,200 | I | $123,900 |
| Absorption costing operating income | B | $130,600 | Q |
| Variable costing beginning inventory ($) | C | $3,000 | R |
| Absorption costing beginning inventory ($) | D | J | S |
| Variable costing ending inventory ($) | E | K | $3,000 |
| Absorption costing ending inventory ($) | F | L | $4,500 |
| PVV | G | M | T |
| Allocated fixed manufacturing costs | $122,500 | N | $125,500 |
There are no price, efficiency, or spending variances, and any production-volume variance is directly written off to cost of goods in the quarter in which it occurs.
Complete the missing figures from the above Table.
| A | H | O |
| B | I | P |
| C | J | Q |
| D | K | R |
| E | L | S |
| F | M | T |
| G | N |
- Consider each of these situations independently:
- a) If a company reports a favorable PVV, what conclusion can we draw about that company?
- b) If operating income under variable costing is higher than operating income under absorption costing, what conclusion can we draw about that company?
- c) If inventory increases by $65,000 under absorption costing and $42,000 under variable costing for the same company in the same period, what conclusion can we draw about that company?
- d) If a company increases production but not sales during a period under absorption costing, what is the impact on the company’s income statement?
3.
- a) What is the goal of the EOQ model?
- b) Why does a firm hold “safety stock?”
- c) What costs are a firm trying to balance when it decides on how much safety stock to hold?
- d) In the absence of safety stock, how does a firm determine its re-order point?
