Juanita prepared her company's variable costing income statement for internal planning. The income statement was as follows: She was planning to compare the results to the prior period and to plan for the upcoming fiscal year. However, she expects the results to be lower than last year. The company produced 9,200 units, which was 400 units more than budgeted and sold 9,000 units. Juanita did not discover any price or efficiency variances within the standard costing system for the current period, and the variable operating costs per unit were $6. Instructions
a. Is there a fixed-MOH volume variable hiding within the variable costing income statement? If so, how much and what is the sign, and where is it hidden?
b.If Juanita used absorption costing for the current period, would she have reported a fixed-MOH volume variance? If so, how much and what is the sign, and where would it be reported?
c.If the company writes off standard variances directly to COGS, prepare the company's current year absorption costing income statement.
d.Explain the operating income difference or no difference between the two methods.

Question

Juanita prepared her company's variable costing income statement for internal planning. The income statement was as follows:  She was planning to compare the results to the prior period and to plan for the upcoming fiscal year. However, she expects the results to be lower than last year. The company produced 9,200 units, which was 400 units more than budgeted and sold 9,000 units. Juanita did not discover any price or efficiency variances within the standard costing system for the current period, and the variable operating costs per unit were $6. Instructions 
a. Is there a fixed-MOH volume variable hiding within the variable costing income statement? If so, how much and what is the sign, and where is it hidden?
b.If Juanita used absorption costing for the current period, would she have reported a fixed-MOH volume variance? If so, how much and what is the sign, and where would it be reported?
c.If the company writes off standard variances directly to COGS, prepare the company's current year absorption costing income statement.
d.Explain the operating income difference or no difference between the two methods.

Quizplus · Accepted Answer

The Answer of Juanita prepared her company's variable costing income statement for internal planning. The income statement was as follows:  She was planning to compare the results to the prior period and to plan for the upcoming fiscal year. However, she expects the results to be lower than last year. The company produced 9,200 units, which was 400 units more than budgeted and sold 9,000 units. Juanita did not discover any price or efficiency variances within the standard costing system for the current period, and the variable operating costs per unit were $6. Instructions 
a. Is there a fixed-MOH volume variable hiding within the variable costing income statement? If so, how much and what is the sign, and where is it hidden?
b.If Juanita used absorption costing for the current period, would she have reported a fixed-MOH volume variance? If so, how much and what is the sign, and where would it be reported?
c.If the company writes off standard variances directly to COGS, prepare the company's current year absorption costing income statement.
d.Explain the operating income difference or no difference between the two methods.

Juanita Prepared Her Company's Variable Costing Income Statement for Internal