The Company X's operating profit report and summary of manufacturing activity presented below. Note that its annual production capacity is 150,000 units, but the business manufactured only 120,000 units during the year. Therefore, it had 20 percent idle capacity (30,000 units not produced ÷ 150,000 units production capacity = 20 percent idle capacity). However, the cost of idle capacity isn't treated as a separate period cost; all the company's fixed manufacturing overhead costs are included in calculating its product cost. Suppose that the business treats the cost of idle capacity as a period cost. Prepare a revised operating profit report and summary of manufacturing activity for the business.
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Company X
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Per Unit
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Totals
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Operating Profit Report for Year
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Sales volume, in Units
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110,000
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Sales Revenue
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$1,400.00
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$154,000,000
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Cost of Goods Sold Expense (see below)
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-760
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-83,600,000
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Gross Margin
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$640.00
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$70,400,000
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Variable Operating Expenses
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-300
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-33,000,000
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Contribution Margin
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$340.00
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$37,400,000
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Fixed Operating Expenses
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-21,450,000
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Operating Profit
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$15,950,000
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Manufacturing Activity Summary for Year
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Per Unit
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Totals
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Annual Production Capacity, in Units
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150,000
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Actual Output, in Units
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120,000
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Raw Materials
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$215.00
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$25,800,000
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Direct Labor
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125
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15,000,000
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Variable Manufacturing Overhead Costs
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70
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8,400,000
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Total Variable Manufacturing Costs
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$410.00
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$49,200,000
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Fixed Manufacturing Overhead Costs
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350
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42,000,000
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Product Cost and Total Manufacturing Costs
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$760.00
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$91,200,000
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