Bailey and Ben, B&B Ice Cream, were excited to prepare their current year income statement. This year was the best year yet and they were excited to provide bonuses for their employees, if profit exceeded the company's expectations. Information for the financial statements is as follows: The company had 5,000 units in beginning inventory, and they carried the same standard costs per unit as this year's production. Instructions
a.Calculate the cost per unit that Ziska will capitalize into inventory this year using (1) variable costing and (2) absorption costing.
b.Determine if there would be a fixed-MOH volume variance under either method. If yes, calculate the amount and specify the sign of the variance, if applicable.
c.Prepare a current year income statement, in good form, using variable costing.
d.Prepare a current year income statement, in good form, using absorption costing.

Question

Bailey and Ben, B&B Ice Cream, were excited to prepare their current year income statement. This year was the best year yet and they were excited to provide bonuses for their employees, if profit exceeded the company's expectations. Information for the financial statements is as follows:  The company had 5,000 units in beginning inventory, and they carried the same standard costs per unit as this year's production. Instructions 
a.Calculate the cost per unit that Ziska will capitalize into inventory this year using (1) variable costing and (2) absorption costing.
b.Determine if there would be a fixed-MOH volume variance under either method. If yes, calculate the amount and specify the sign of the variance, if applicable.
c.Prepare a current year income statement, in good form, using variable costing.
d.Prepare a current year income statement, in good form, using absorption costing.

Quizplus · Accepted Answer

The Answer of Bailey and Ben, B&B Ice Cream, were excited to prepare their current year income statement. This year was the best year yet and they were excited to provide bonuses for their employees, if profit exceeded the company's expectations. Information for the financial statements is as follows:  The company had 5,000 units in beginning inventory, and they carried the same standard costs per unit as this year's production. Instructions 
a.Calculate the cost per unit that Ziska will capitalize into inventory this year using (1) variable costing and (2) absorption costing.
b.Determine if there would be a fixed-MOH volume variance under either method. If yes, calculate the amount and specify the sign of the variance, if applicable.
c.Prepare a current year income statement, in good form, using variable costing.
d.Prepare a current year income statement, in good form, using absorption costing.

Bailey and Ben, B&B Ice Cream, Were Excited to Prepare