The Miller Company Had the Following Results for Its First

question 9

Essay

The Miller Company had the following results for its first two years of operation:
$\begin{array}{|l|r|r|}\hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Sales } & \$ 1,200,000 & \$ 1,200,000 \\\hline \text { Cost of goods sold } & \underline{800,000} & \underline{800,000} \\\hline \text { Gross margin } & 400,000 & 400,000 \\\hline \text { Selling and administrative } & \underline{300,000} & \underline{300,000} \\\text { expense } & & \\\hline \text { Operating income } & \$ 100,000 & \$ 100,000 \\\hline\end{array}$
In Year 1,the company produced and sold 40,000 units of its only product; in Year 2,the company again sold 40,000 units,but increased production to 50,000 units.The company's variable production cost is $5 per unit,and its fixed manufacturing overhead cost is $600,000 a year.Fixed manufacturing overhead costs are applied to the product on the basis of each year's unit production (i.e.,a new fixed overhead rate is computed each year).Variable selling and administrative expenses are $2 per unit sold.
Required:
a)Compute the unit product cost for each year under absorption costing and under variable costing.
b)Prepare an income statement for each year,using the contribution format with variable costing.
c)Reconcile the variable costing and absorption costing income figures for each year.
d)Explain why the operating income for Year 2 under absorption costing was higher than the operating income for Year 1,although the same number of units were sold in each year.

Recognize the role of the parietal lobe in touch, pain, and temperature processing.

Understand how the temporal lobe is involved in hearing, language comprehension, recognition of complex patterns (like faces), and emotional processing.

Explain the significance of the primary somatosensory and motor cortices in sensory input processing and movement control.

Recognize the role of the amygdala in evaluating emotional situations and responding to facial expressions communicating emotion.

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Definitions:

Uncertain Prices

Refers to the unpredictability in the cost of goods, services, or assets, often due to factors like market volatility, supply and demand imbalances, or economic uncertainties.

Near Future

A term referring to the time period that is just ahead, typically implying events or developments expected to occur within a short timeframe from the present.

Hedge Risk

A strategy or financial instrument used to offset potential losses or gains that may be incurred by a companion investment.

Option Positions

Refers to the holding of options contracts, including call and put options, as part of an investment strategy or portfolio.