Discussion Question: Please answer each of the following questions in detail. Provide in-text citations and include examples whenever applicable. · Is a variable costing income statement applicable to...

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Discussion Question: Please answer each of the following questions in detail. Provide in-text citations and include examples whenever applicable. · Is a variable costing income statement applicable to service operations? If so, provide a hypothetical example of variable costing income statements in a service operation. · What is the difference between variable costing and absorption costing income statements? a. Provide a hypothetical income statement in both formats in which the number of units sold is different from the number of units manufactured. Explain the contrast between the two formats One page ,APA formate. Additional information about APA format APA Reference: APA Format machine website : https://www.citationmachine.net/apa/cite-a-website
Answered Same DayMar 31, 2022

Answer To: Discussion Question: Please answer each of the following questions in detail. Provide in-text...

Sandeep answered on Mar 31 2022
96 Votes
Hypothetical Income Statement                                4
HYPOTHETICAL INCOME STATEMENT
Table of Contents
Discussion Questions:    3
Difference between Variable Costing and Absorption costing:    4
Hypothet
ical Income Statement of RYAN LXS :    5
References    8
Discussion Questions:
Variable costing is one which changes with change in level of Production or Sales volume and include only variable manufacturing cost (i.e. Prime Cost + Manufacturing Overheads) . A Variable costing income statement is defined as in which full variable cost are subtracted from the revenue of firm for computing a stated contribution margin .It is this Contribution margin from which all fixed cost are finally deducted to achieve net profit /(loss) for the period. Yes variable costing income statement is applicable to service operations .But service industry does not manufacture any product and consequently its income statement does not exhibit any COGS expense. There is unanimity that variable costing is preferred over absorption costing in service industry as it excludes period/Fixed costs which are like sunk cost and does not influence the decision making .Such cost do not change with change in with level of production or sales activity but remain constant and cannot be avoided /eliminated if required unlike variable cost . Some example of service companies are Food Industry, healthcare Industry, BPO/KPO/Outsourcing industry, financial services industry.
Variable Costing Income Statement and Contribution Margin Analysis for a Tuition centre:
Sales Revenue from Tuitions (Student enrolled 4500 @ 150)    $ 6, 75,000
Less Variable Cost of Sales
Registration, record and marketing cost @ $ 35/Student        $1, 57,500
Instruction cost @ $ 20/Student enrolled             $ 90,000
Variable Tutors direct labour cost @ $ 15             $ 67,500        
Contribution Margin                         $ 3, 60,000
Less Fixed...
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