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Author Question: Galliart Company has two identical divisions, East and West. Their sales, production volume, and ... (Read 76 times)

Lobcity

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on: Mar 6, 2021

Question 1

Explain the difference between the gross margin format and the contribution margin format for the income statement. What information is highlighted with each?

Question 2

Galliart Company has two identical divisions, East and West. Their sales, production volume, and fixed manufacturing costs have been the same for the last five years. The amounts for each division were as follows:
20142015201620172018
Units produced50,00055,00055,00044,00044,000
Units sold45,00045,00050,00050,00050,000
Fixed manufacturing costs$55,000$55,000$55,000$55,000$55,000

East Division uses absorption costing and West Division uses variable costing.
Both use FIFO inventory methods.
Variable manufacturing costs are $5 per unit.
Selling and administrative expenses were identical for each division.
There were no inventories at the beginning of 2014. 

Which division reports the highest income each year? Explain.
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by Lobcity on Mar 6, 2021

pratush dev

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Reply #1 on: Mar 6, 2021
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Lobcity

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Reply 2 on: Mar 6, 2021
Thanks for the timely response, appreciate it

sultana.d

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Reply 3 on: Yesterday
Gracias!

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