Wrap-It Company, a Manufacturer of Wrapping Paper, Began Operations on June

question 126

Essay

Wrap-It Company, a manufacturer of wrapping paper, began operations on June 1 of the current year. During this time, the company produced 370,000 units and sold 310,000 units at a sales price of $50 per unit. Cost information for this period is shown in the following table:
$$\begin{array} { | l | l | } \hline \text { Production costs } & \\\hline \text { Direct materials } & \$ 2.00 \text { per unit } \\\hline \text { Direct labor } & \$ 80 \text { per unit } \\\hline \text { Variable overhead } & \$ 814,000 \text { in total } \\\hline \text { Fixed overhead } & \$ 481,000 \text { in total } \\\hline \text { Non production costs } & \\\hline \text { Variable selling and administrative } & \$ 78,000 \text { in total } \\\hline \text { Fixed selling and administrative } & \$ 210,000 \text { in total } \\\hline\end{array}$$ a. Prepare Wrap-It's December 31st income statement for the current year under absorption costing.
b. Prepare Wrap-It's December 31st income statement for the current year under variable costing.

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Definitions:

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired; a response which is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

Instrumental Conditioning

A learning process in which behavior is modified by the consequences of the behavior, through reinforcement or punishment.

CR and US

denote Conditioned Response and Unconditioned Stimulus respectively; terms used in classical conditioning to describe learned responses and natural triggers.

Training

The process of teaching or learning specific skills or behaviors, often aimed at improving performance in professional or physical activities.