CMA Study Group

hi every body


Dremmon Corporation uses a standard cost accounting system. Data for the last fiscal
year are as follows.
                                                                                             Units
Beginning inventory of finished goods                                  100
Production during the year                                                    700
Sales                                                                                      750
Ending inventory of finished goods                                         50

                                                                                           Per Unit
Product selling price                                                              $200
Standard variable manufacturing cost                                      90
Standard fixed manufacturing cost                                           20*
Budgeted selling and administrative costs (all fixed)       $45,000


*Denominator level of activity is 750 units for the year.

There were no price, efficiency, or spending variances for the year, and actual selling and
administrative expenses equaled the budget amount. Any volume variance is written off
to cost of goods sold in the year incurred. There are no work-in-process inventories.

Assuming that Dremmon used absorption costing, the amount of operating income earned
in the last fiscal year was

a. $21,500.
b. $27,000.
c. $28,000.
d. $30,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

Correct answer a. Dremmon's operating income was $21,500 calculated as follows.

Sales (750 x $200) $150,000
COGS [750 x ($90 + $20)] 82,500
Underapplied fixed cost (50 x $20) 1,000
Selling & administrative 45,000
Operating income $ 21,500

-------------------------------------------
Patricia Abels CPA
Academic
The University of Findlay
Findlay OH
United States
-------------------------------------------






Original Message:
Sent: 08-11-2012 06:45 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi every body


Dremmon Corporation uses a standard cost accounting system. Data for the last fiscal
year are as follows.
                                                                                             Units
Beginning inventory of finished goods                                  100
Production during the year                                                    700
Sales                                                                                      750
Ending inventory of finished goods                                         50

                                                                                           Per Unit
Product selling price                                                              $200
Standard variable manufacturing cost                                      90
Standard fixed manufacturing cost                                           20*
Budgeted selling and administrative costs (all fixed)       $45,000


*Denominator level of activity is 750 units for the year.

There were no price, efficiency, or spending variances for the year, and actual selling and
administrative expenses equaled the budget amount. Any volume variance is written off
to cost of goods sold in the year incurred. There are no work-in-process inventories.

Assuming that Dremmon used absorption costing, the amount of operating income earned
in the last fiscal year was

a. $21,500.
b. $27,000.
c. $28,000.
d. $30,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

Dear Patricia 

Could you please explain why do you subtracts 1000 from operating income this period 

thanks indeed 




-------------------------------------------
Anas Ziadeh
Accountant
Jordan Light Vehicel Manufacturing LLC
Amman
Jordan
-------------------------------------------






Original Message:
Sent: 08-11-2012 07:28 AM
From: Patricia Abels
Subject: part 1 Question

Correct answer a. Dremmon's operating income was $21,500 calculated as follows.

Sales (750 x $200) $150,000
COGS [750 x ($90 + $20)] 82,500
Underapplied fixed cost (50 x $20) 1,000
Selling & administrative 45,000
Operating income $ 21,500

-------------------------------------------
Patricia Abels CPA
Academic
The University of Findlay
Findlay OH
United States
-------------------------------------------






Original Message:
Sent: 08-11-2012 06:45 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi every body


Dremmon Corporation uses a standard cost accounting system. Data for the last fiscal
year are as follows.
                                                                                             Units
Beginning inventory of finished goods                                  100
Production during the year                                                    700
Sales                                                                                      750
Ending inventory of finished goods                                         50

                                                                                           Per Unit
Product selling price                                                              $200
Standard variable manufacturing cost                                      90
Standard fixed manufacturing cost                                           20*
Budgeted selling and administrative costs (all fixed)       $45,000


*Denominator level of activity is 750 units for the year.

There were no price, efficiency, or spending variances for the year, and actual selling and
administrative expenses equaled the budget amount. Any volume variance is written off
to cost of goods sold in the year incurred. There are no work-in-process inventories.

Assuming that Dremmon used absorption costing, the amount of operating income earned
in the last fiscal year was

a. $21,500.
b. $27,000.
c. $28,000.
d. $30,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

Any volume variance is written off
to cost of goods sold in the year incurred

-------------------------------------------
Patricia Abels CPA
Academic
The University of Findlay
Findlay OH
United States
-------------------------------------------






Original Message:
Sent: 08-13-2012 04:11 AM
From: Anas Ziadeh
Subject: part 1 Question

Dear Patricia 

Could you please explain why do you subtracts 1000 from operating income this period 

thanks indeed 




-------------------------------------------
Anas Ziadeh
Accountant
Jordan Light Vehicel Manufacturing LLC
Amman
Jordan
-------------------------------------------






Original Message:
Sent: 08-11-2012 07:28 AM
From: Patricia Abels
Subject: part 1 Question

Correct answer a. Dremmon's operating income was $21,500 calculated as follows.

Sales (750 x $200) $150,000
COGS [750 x ($90 + $20)] 82,500
Underapplied fixed cost (50 x $20) 1,000
Selling & administrative 45,000
Operating income $ 21,500

-------------------------------------------
Patricia Abels CPA
Academic
The University of Findlay
Findlay OH
United States
-------------------------------------------






Original Message:
Sent: 08-11-2012 06:45 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi every body


Dremmon Corporation uses a standard cost accounting system. Data for the last fiscal
year are as follows.
                                                                                             Units
Beginning inventory of finished goods                                  100
Production during the year                                                    700
Sales                                                                                      750
Ending inventory of finished goods                                         50

                                                                                           Per Unit
Product selling price                                                              $200
Standard variable manufacturing cost                                      90
Standard fixed manufacturing cost                                           20*
Budgeted selling and administrative costs (all fixed)       $45,000


*Denominator level of activity is 750 units for the year.

There were no price, efficiency, or spending variances for the year, and actual selling and
administrative expenses equaled the budget amount. Any volume variance is written off
to cost of goods sold in the year incurred. There are no work-in-process inventories.

Assuming that Dremmon used absorption costing, the amount of operating income earned
in the last fiscal year was

a. $21,500.
b. $27,000.
c. $28,000.
d. $30,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

how to calculate ( the reason ) underapplied fixed cost ?

------------------------------
Asmaa Mohamed Salah Mahmoud Mostafa
Unemployed
Dakahlia
Egypt
------------------------------

Original Message:
Sent: 08-11-2012 07:28 AM
From: Patricia Abels
Subject: part 1 Question

Correct answer a. Dremmon's operating income was $21,500 calculated as follows.

Sales (750 x $200) $150,000
COGS [750 x ($90 + $20)] 82,500
Underapplied fixed cost (50 x $20) 1,000
Selling & administrative 45,000
Operating income $ 21,500

-------------------------------------------
Patricia Abels CPA
Academic
The University of Findlay
Findlay OH
United States

Original Message:
Sent: 08-11-2012 06:45 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi every body


Dremmon Corporation uses a standard cost accounting system. Data for the last fiscal
year are as follows.
                                                                                             Units
Beginning inventory of finished goods                                  100
Production during the year                                                    700
Sales                                                                                      750
Ending inventory of finished goods                                         50

                                                                                           Per Unit
Product selling price                                                              $200
Standard variable manufacturing cost                                      90
Standard fixed manufacturing cost                                           20*
Budgeted selling and administrative costs (all fixed)       $45,000


*Denominator level of activity is 750 units for the year.

There were no price, efficiency, or spending variances for the year, and actual selling and
administrative expenses equaled the budget amount. Any volume variance is written off
to cost of goods sold in the year incurred. There are no work-in-process inventories.

Assuming that Dremmon used absorption costing, the amount of operating income earned
in the last fiscal year was

a. $21,500.
b. $27,000.
c. $28,000.
d. $30,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

The amount of fixed overhead applied to production was $20 per unit × 700 units produced, or $14,000. The amount produced (700 units) was lower than the expected amount of 750 units. Therefore, there is a fixed overhead production-volume variance of $1,000 ($20 × 50 units).

------------------------------
Satish Damodaran
Accountant
------------------------------

Original Message:
Sent: 11-22-2019 06:33 PM
From: Asmaa Mohamed Salah Mahmoud Mostafa
Subject: part 1 Question

how to calculate ( the reason ) underapplied fixed cost ?

------------------------------
Asmaa Mohamed Salah Mahmoud Mostafa
Unemployed
Dakahlia
Egypt

Original Message:
Sent: 08-11-2012 07:28 AM
From: Patricia Abels
Subject: part 1 Question

Correct answer a. Dremmon's operating income was $21,500 calculated as follows.

Sales (750 x $200) $150,000
COGS [750 x ($90 + $20)] 82,500
Underapplied fixed cost (50 x $20) 1,000
Selling & administrative 45,000
Operating income $ 21,500

-------------------------------------------
Patricia Abels CPA
Academic
The University of Findlay
Findlay OH
United States

Original Message:
Sent: 08-11-2012 06:45 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi every body


Dremmon Corporation uses a standard cost accounting system. Data for the last fiscal
year are as follows.
                                                                                             Units
Beginning inventory of finished goods                                  100
Production during the year                                                    700
Sales                                                                                      750
Ending inventory of finished goods                                         50

                                                                                           Per Unit
Product selling price                                                              $200
Standard variable manufacturing cost                                      90
Standard fixed manufacturing cost                                           20*
Budgeted selling and administrative costs (all fixed)       $45,000


*Denominator level of activity is 750 units for the year.

There were no price, efficiency, or spending variances for the year, and actual selling and
administrative expenses equaled the budget amount. Any volume variance is written off
to cost of goods sold in the year incurred. There are no work-in-process inventories.

Assuming that Dremmon used absorption costing, the amount of operating income earned
in the last fiscal year was

a. $21,500.
b. $27,000.
c. $28,000.
d. $30,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

The other thing to remember in this problem is that the problem stated that there were no other variances.
That means that the budgeted fixed overhead of $15,000 is equal to the actual fixed overhead at $15,000.

With sales of 700 units, only $14,000 would have been allocated as fixed overhead.

Actual minus Allocated is $1,000 which is written off directly to COGS as a production-volume variance.

-mh

------------------------------
Michael Henry
Controller
------------------------------

Original Message:
Sent: 08-11-2012 06:45 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi every body


Dremmon Corporation uses a standard cost accounting system. Data for the last fiscal
year are as follows.
                                                                                             Units
Beginning inventory of finished goods                                  100
Production during the year                                                    700
Sales                                                                                      750
Ending inventory of finished goods                                         50

                                                                                           Per Unit
Product selling price                                                              $200
Standard variable manufacturing cost                                      90
Standard fixed manufacturing cost                                           20*
Budgeted selling and administrative costs (all fixed)       $45,000


*Denominator level of activity is 750 units for the year.

There were no price, efficiency, or spending variances for the year, and actual selling and
administrative expenses equaled the budget amount. Any volume variance is written off
to cost of goods sold in the year incurred. There are no work-in-process inventories.

Assuming that Dremmon used absorption costing, the amount of operating income earned
in the last fiscal year was

a. $21,500.
b. $27,000.
c. $28,000.
d. $30,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------