Ask Question
17 August, 20:04

Variable and Absorption Costing-Service Company Lawn RX, Inc. prepares a variable costing income statement for internal management and an absorption costing income statement for its bank. Lawn RX provides a quarterly lawn care service that is sold for $155. The variable and fixed cost data are as follows:

Direct labor $100.00

Overhead Variable cost per unit $7

Fixed cost (annual) $100,000

Marketing, general and administrative Variable cost (per service contract completed) $8

Administrative expenses (fixed - annual cost) $42,000

During 2016, 10,000 service contracts were signed and 9,500 service contracts were completed. Lawn RX had no service contracts at the beginning of the year.

Required:

a. Calculate reported income for management. Do not use negative signs with any answers.

b. Calculate reported income for the bank. Do not use negative signs with any answers.

+3
Answers (1)
  1. 17 August, 21:21
    0
    variable costyng net income 238,000

    under absorption 239,000

    Explanation:

    Variable costing:

    Sales revenue 1.472.500‬

    variable expense 1.092.500‬

    contribution margin 380,000

    manufacturing fixed cost 100,000

    adminsitrative fixed cost 42,000

    net gain 238,000

    Absorption costing:

    units cost:

    100 + 7 + 100,000 / 10,000 = 117

    Sales revenue 1.472.500‬

    Cost of goods sold 1.111.500‬‬

    Gross profit 361,000

    G&A expense (variable) 80,000

    G&A fixed 42,000

    Net income 239,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Variable and Absorption Costing-Service Company Lawn RX, Inc. prepares a variable costing income statement for internal management and an ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers