Explore BrainMass

Explore BrainMass

    Managerial Accounting for Far North Telecom Ltd.

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Please see attachment for proper format.

    Far North Telecom, Ltd., of Ontario, has organized a new division to manufacture and sell specialty cellular telephones. The division's monthly costs are shown in the table below. Far North Telecom regards all of its workers as full-time employees and the company has a long-standing no layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labor costs in its fixed manufacturing overhead. The cellular phones sell for $150 each. During September, the first month of operations, the following activity was recorded: 12,000 units produced, 10,000 units sold. Comment on the five questions below the table. Respond to at least two of your fellow students' postings.

    Manufacturing costs:

    Variable costs per unit:
    Direct Materials $48
    Variable manufacturing overhead $2
    Fixed manufacturing overhead costs (total) $360,000
    Selling and administration costs:
    Variable 12% of sales
    Fixed (total) $470,000

    1. Compute the unit product cost under:
    o absorption costing
    o variable costing
    2. Prepare an absorption costing income statement for September
    3. Prepare a contribution format income statement for September using variable costing.
    4. Assume that the company must obtain additional financing in order to continue operations. As a member of top management, would you prefer to rely n the statement in (b) above or in (3) above when meeting with a group of prospective investors?
    5. Reconcile the absorption costing and variable costing net operating incomes in (2) and (3) above.

    © BrainMass Inc. brainmass.com March 4, 2021, 11:45 pm ad1c9bdddf


    Solution Summary

    The solution discusses managerial accounting for Far North Telecom Ltd.