E8-29 Segmented Income Statement

Kniltline Inc. Produce high-end swaters and jackets in a single factory.

Sweater Jackets
Sales $ 210,000 $ 450,000
Variable cost of goods sold $ 145,000 $ 196,000
Direct fixed overhead $ 25,000 $ 47,000

sales commission of 5% of sales is paid for each for two product lines. Direct fixed selling and administrative
expense was estimated to be $20.000 for the sweater line and $50.000 for the jacket line.
Common fixed overhead fot the factory was estimated to be $45.000. Common selling and administrative
expense was estimated to be $15.000.

Required
1. Prepare a segmented income statement for Knitline for the coming year, using variable costing.

Knitline Inc
Segmented Income Statement
For the Coming Year
Sweater Jackets Total
Sales $ 210,000 $ 450,000 $ 660,000
Variable cost of goods sold $ (145,000) $ (196,000) $ (341,000)
Variable selling expense $ (10,500) $ (22,500) $ (33,000)
Conntribution Margin $ 54,500 $ 231,500 $ 286,000
Less direct fixed expense
Direct fixed overhead $ (25,000) $ (47,000) $ (72,000)
Direct selling & administrative $ (20,000) $ (50,000) $ (70,000)
Segmen margin $ 9,500 $ 134,500 $ 144,000
Less common fixed expenses
common fixed overhead $ (45,000)
common selling and administrative $ (15,000)
Operating Income $ 84,000

2. CONCEPTUAL CONNECTION. Suppose that next year, all revenue and cost are expected to remain
the same expect for direct fixed overhead expense, which wil go up by $10.000 for one of the
product lines due to cost related to new equipment. Does it matter which line (Sweater or jacket)
requires the new equipment? Why?

Menurut saya bila ada kenaikan $10.000 pada direct fixed overhead expense akan mempengaruhi di
setiap product lines.
1. Jika, kenaikan direct fixed overhead expense terjadi pada produk sweater maka segmen margin
menjadi -$500 dan Operating Income sebesar 74.000. Terjadi kerugian jika kenaikan direct fixed
overheadnya di kenakan pada produk sweater.
2. Jika, kenaikan direct fixed overhead expense terjadi pada produk Jackets maka segmen margin
menjadi $124.500. tidak menimbulkan kerugian jika kenaikan direct fixed overheadnta di kenakan
pada produk jackets.

dari perhitungan ini, menurut saya yang membutuhkan peralatan baru adalah produk Jacket. Karena
tidak menimbulkan kerugian di produk sweater.

P8-35 Variable-Costing and Absorption-Costing Income

Borques Company produces and sells wooden pallets that are used for moving & stacking materials.
The operating costs for the past year were as follows:

Variabel cost per unit

Direct materials $ 2.85
Direct labor $ 1.92
Variabel overhead $ 1.60
Variable selling $ 0.90
Fixed cost per year*
Fixed overhead $ 180,000
Selling and administrative $ 96,000

During the year, Borques prouced 200.000 wooden pallets and sold 204.300 at 49 each.
Borqued had 8.200 pallets in beginning finished goods inventory; cost have not changed from
last year to this year. An actual costing system in used for product costing.

Required:
1. What is the per-unit inventory cost that is acceptable for reporting on Borques`s balances
sheet at the end of the year? How many units are in ending inventory? What is the total cost
of ending inventory?

Unit in ending inventory = 8.200 +200.000 - 204.300

3900 unit

Per unit cost under absorption costing =2,85 +1,92+1,60+(180000/200000)

$ 7.27 per unit

Total Cost of Ending Inventory =3.900 * 7,27

$ 28,353

2. Calculate absoption costing operating income

Sales $ 1,838,700
COGS $ (1,485,261)
Gross Margin $ 353,439
Unit variable selling expense $ (183,870)
Fixed selling & adm espense $ (96,000)
Operating Income $ 73,569

3. Conceptual Connection. What would the per-unit inventory cost be under variable costing?
Does this differ from the unit cost computed in requirement 1? Why?

Berbeda karena jika unit inventory under variable costing hasilnya akan berbeda.
bisa dihitung:
per unit cost under variable costing = 2,83 + 1,92 + 1,60
$ 6.37 per unit
per unit under Absoption costing mejumlahkan juga fixed cost dan fixed overhead ke dalam
perhitungannya. Sehingga hasil yang didapatkan juga berbeda.
Jika, menggunakan under absorption costing hasilnya lebih tinggi dibaandinkan menggunakan
under variable costing.

4. Calculate variable costing operating income

Sales $ 1,838,700
COGS $ (1,301,391)
Gross Margin $ 537,309
Unit variable selling expense $ (183,870)
Fixed selling & adm espense $ (96,000)
Fixed overhead $ (180,000)
Operating Income $ 77,439

5. Suppose that Borques Company had sold 196.700 pallets during the year. What would absoption-
costing operating income have been? Variable-costing operating income?

Absoption costing Operating Income

Sales $ 1,770,300
COGS $ (1,430,009)
Gross Margin $ 340,291
Unit variable selling expense $ (177,030)
Fixed selling & adm espense $ (96,000)
Operating Income $ 67,261

Variable costing Operating Income

Sales $ 1,770,300
COGS $ (1,252,979)
 Gross Margin $ 517,321
Unit variable selling expense $ (177,030)
Fixed selling & adm espense $ (96,000)
Fixed overhead $ (180,000)
Operating Income $ 64,291
trative

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