Running head: COST ACCOUNTING1Cost AccountingStudents NameInstitutional AffiliationCOST ACCOUNTING21. a) Variable costing method.The Klocka CompanyIncome statementFor the year ended December 31, 2014.ParticularsSales (415,000 units* $25 per unit)Less:Variable cost of goods sold (W1)Operating cost (variable) (415,000*$1.70 perunit)Contribution marginLess :Fixed manufacturing costsFixed operating(marketing) costsNet operating incomeAmount ($)2,241,000705,500Amount ($)10,375,000(2,946,500)7,428,5001,800,0001,040,000(2,840,000)4,588,500Therefore, the net operating income under this method is $4,588, 500b) Absorption costingThe Klocka CompanyIncome statementFor the year ended December 31, 2014.ParticularsSales (415,000 units * $25/ unit)Less: cost of goods sold (W2)Gross marginLess:Operating cost( variable)((415,000*$1.70 per unit)Fixed operating costsNet operating incomeAmount $705,5001,040,000Amount $10,375,000(4,333,000)6,042,000(1,745,500)4,296,500COST ACCOUNTING32. The Klockas operating income as percentage of revenuesParticularsOperating incomeSales/revenues 100%VariableCosting$4,588,500$10,375,000Absorptioncosting$4,296,500$10,375,00044.23%41.41%3. The operating income obtained by using variable costing method is higher or greater thanthe operating income obtained under abs ...
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