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The following hypothetical events relate to the Berlin Philharmonic. Indicate whether each transaction immediately gives rise to a liability under U.S. GAAP and, separately, IFRS. If the Berlin Philharmonic recognizes a liability, state the account title, the amount, and the classification of the liability on the balance sheet as either a current liability or a noncurrent liability. The Berlin Philharmonic reports its results in euros.
f. The Berlin Philharmonic signs a five-year contract with Sir Simon Rattle, present conductor of the Philharmonic, to be the spokesman for the symphony at the end of his current contract, in 2012. Under the terms of the deal, the Berlin Philharmonic will pay compensation of $2 million a year to Sir Simon, beginning in 2012. Sir Simon will earn this compensation regardless of whether the Berlin Philharmonic asks him to perform any speaking engagements each year.
Kenzi Kayaking, a manufacturer of kayaks, began operations this year. During this first year, the company produced 1,050 kayaks and sold 800 at a price or $1,050 each. At this first year-end. the company reported the following income statement information using absorption costing.
a. Product cost per kayak totals $500, which consists of$400 in variable production cost and $100 in fixed production cost-the latter amount is based on$105,000 of fixed production costs allocated to the 1,050 kayaks produced.
b. The $230,000 in selling and administrative expenses consists of$75,000 that is variable and $155,000 that is fixed.
Prepare an income statement for the current year under variable costing.
Fill in the blanks: The dollar difference in variable costing income and absorption costing Income = ____ units x _____ fixed overhead per unit.