Knipple Woodworking Corporation produces fine cabinets. The company uses a job-order costing system in which its predetermined overhead rate is based on capacity. The capacity of the factory is determined by the capacity of its constraint, which is an automated bandsaw. Additional information is provided below for the most recent month:?Estimates at the beginning of the month:??? Estimated total fixed manufacturing overhead$24,288?? Capacity of the bandsaw240 hours?Actual results:??? Sales$71,473?? Direct materials$10,400?? Direct labor$17,300?? Actual total fixed manufacturing overhead$24,288?? Selling and administrative expense$9,100? Actual hours of bandsaw use230hoursRequired:Prepare an income statement following the
Example in Appendix 2B in which any cost of unused capacity is directly recorded on the income statement as a period expense.
What will be an ideal response?
| ? | Estimated total fixed manufacturing overhead | $24,288 | ? |
| ? | Estimated activity level | 240 | hours |
| ? | Predetermined overhead rate | $101.20 | per hour |
| ? | Sales | ? | $71,473 |
| ? | Cost of Goods Sold: | ? | ? |
| ? | Direct materials | $10,400 | ? |
| ? | Direct labor | 17,300 | ? |
| ? | Manufacturing overhead applied 230 hours × $101.20 per hour | 23,276 | 50,976 |
| ? | Gross margin | ? | 20,497 |
| ? | Cost of unused capacity (240 hours ? 230 hours) × $101.20 per hour | $1,012 | ? |
| ? | Selling and administrative expense | 9,100 | 10,112 |
| ? | Net operating income | ? | $10,385 |
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