Joint cost allocation; by-products Go-Go Co., which began operations in the current year, produces gasoline and a gasoline by-product. Go-Go accounts for the by-product at the time of production through a reduction in joint product cost of goods sold. The following information is available pertaining to annual sales and production: Sales and production data: Total production costs to split-off point $720,000 Gasoline sales 1,620,000 180,000 90,000 By-product sales Gasoline inventory, December 31 Additional by-product costs: Marketing Production $60,000 90,000 a. Compute Go-Go's cost of sales for gasoline and for the by-product for the year. Cost of sales for gasoline $ Cost of by-product $ b. If Go-Go had used the by-product's NRV to reduce the joint cost of the gasoline, how (if at all) would the gross margin for the year change? Gross margin would

Joint cost allocation; by-products Go-Go Co., which began operations in the current year, produces gasoline and a gasoline by-product. Go-Go accounts for the by-product at the time of production through a reduction in joint product cost of goods sold. The following information is available pertaining to annual sales and production: Sales and production data: Total production costs to split-off point $720,000 Gasoline sales 1,620,000 180,000 90,000 By-product sales Gasoline inventory, December 31 Additional by-product costs: Marketing Production $60,000 90,000 a. Compute Go-Go's cost of sales for gasoline and for the by-product for the year. Cost of sales for gasoline $ Cost of by-product $ b. If Go-Go had used the by-product's NRV to reduce the joint cost of the gasoline, how (if at all) would the gross margin for the year change? Gross margin would

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.16E: Product cost concept of product pricing Based on the data presented in Exercise 12-15, assume that...

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A company reports the following information for the current year: Units Produced (25,000)< Units Sold (15,000), DM ($9 per unit), DL ($11 per unit), VOH (total $75,000) and FOH (total $137,500). If the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under absorption costing. O a. $80,500 O b. $122,500 c. $55,000 O d. $67,500
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Required information [The following information applies to the questions displayed below] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): $ 10,000 5,500 4,500 2,250 $ 2,250 Sales Variable expenses Contribution margin Fixed expenses Net operating income 15. Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $2,250 and the total fixed expenses are $5,500. Given this scenario and assuming that total sales remain the same. Using the degree of calculated operating leverage, what is the estimated percent increase in net operating income of a 5% increase in sales? (Round your intermediate calculations and final answer to 2 decimal places.) Increase in net operating income
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses $ 15,000 9,000 6,000 3,120 $ 2,880 Net operating income reversed. In other words, 15. Assume that the amounts of the company's total variable expenses and total fixed expenses assume that the total variable expenses are $3,120 and the total fixed expenses are $9,000. Using the degree of operating leverage, what is the estimated percent increase in net operating income of a 5% increase in unit sales? (Round your intermediate calculations and final answer to 2 decimal places.) Increase in net operating income
Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales Variable expenses Contribution margin Fixed expenses Net operating income $ 15,000 9,000 6,000 3,120 $ 2,880 14. Assume the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume the total variable expenses are $3,120 and the total fixed expenses are $9,000. Under this scenario and assuming total sales remain the same, what is the degree of operating leverage? Note: Round your answer to 2 decimal places. Degree of operating leverage
Required information [The following information applies to the questions displayed below] Barnes Company reports the following for its product for its first year of operations Direct materials Direct labor s 35 per unit Variable overhead 5 25 per unit $10 per unit Fixed overhead Variable selling and administrative expenses $ 48,000 per year $3 per unit Fixed selling and administrative expenses $ 20,000 per year The company sells its product for $150 per unit. Compute gross profit using absorption costing assuming the company (al produces and sells 2,000 units and (b) produces 2,400 units and sells 2,000 units. Answer is not complete. (a) 2,000 Units Produced and 2.000 Units Sold (0)2,400 Unit Produced and 2,000 Units Sold Gross profit using absorption costing Sales Cost of goods sold Gross profit 00
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Required information [The following information applies to the questions displayed below.] Oslo Company prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 45,000 Variable expenses Contribution margin Fixed expenses 31,500 13,500 8,640 Net operating income $ 4,860 15. Assume that the amounts of the company's total variable expenses and total fixed expenses were reversed. In other words, assume that the total variable expenses are $8,640 and the total fixed expenses are $31,500. Using the degree of operating leverage, what is the estimated percent increase in net operating income and final answer to 2 decimal places.) a 5% increase in unit sales? (Round your intermediate calculations Increase in net operating income
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