Assignment 5
During the first year of operations , Greenwood Village Fridge Company
manufactured 40,000 mini refrigerators, of which 36,000 were sold. Operating
data for the year are summarized as follows:
Manufacturing cost:
Cost of goods manufactured including:
Direct materials. . . . . . .
………………………. 3,200,000
Direct labor . . . . . ………
………………………..1,120,000
Variable manufacturing overhead. . .
. . . . 880,000
Fixed manufacturing overhead . . . .
………560,000
Variable Selling and administrative
expenses . . . . . . . 648,000
Fixed Selling and administrative
expenses …………………288,000
Required
Prepare the company’s income
statement under absorption costing.
Prepare the company’s income
statement under variable costing.
Explain any difference between
the company’s income under costing from parts a and b above.
Grande Sonido is a merchandising company specializing in home computer
speakers.
The company budgets its monthly cost of goods sold to equal 70% of sales. Its
inventory policy calls for ending inventory in each month to equal 20% of the
next month’s budgeted cost of goods sold. All purchases are on credit, and 25%
of the purchases in a month is paid for in the same month. Another 60% is paid
for during the first month after purchase, and the remaining 15% is paid for in
the second month after purchase. The following sales budgets are set: July, $
350,000; August, $ 290,000; September, $ 320,000; October, $ 275,000; and
November, $ 265,000.
Required:
Compute the following. (Hint: For
part a, you can use Exhibits 7.7 and 7.8 in our textbook for guidance, but note
that budgeted sales are in dollars for this assignment.)
a Budgeted merchandise purchases
for July, August, September, and October;
b
Budgeted payments on accounts payable for September and October; and
c. Budgeted ending balances of
accounts payable for September and October
TUTORIAL PREVIEW
GREENWOOD VILLAGE FRIDGE COMPANY
Absorption Costing Income Statement
Sales.....................................................................................................
$6,480,000
Cost of goods sold (36,000 units × $142.00*).....................................
5,112,000
Gross
profit...........................................................................................
$
1,368,000
File name: Assignment 5 Greenwood and Grande Sonido.doc
File type: .doc PRICE: $20
