Total Product cost per Unit :
Absorption Costing | Variable Costing |
$ 106 ( $ 90 +$ 16) | $ 90 |
Operating Income Under Absorption Costing :
Particulars | Amount ($) |
Sales (310 Units * $ 180) | 55,800 |
Less : Cost of Goods Sold (310 Units*106) | 32,860 |
Gross Profit | 22,940 |
Less : Operating Expenses | |
General and Admin Expenses | 7,400 |
Operating Income | 15,540 |
Operating Income Under Variable Costing :
Particulars | Amount ($) |
Sales (310 Units * $ 180)..........(a) | 55,800 |
Less : Cost of Goods Sold | |
Opening Stock of Inventory ( 120 Units*90) (i) | 10,800 |
Add : Good Produced ( 190 Units*90) (ii) | 27,900 |
Less : Closing Stock (iii) | 0 |
Cost of Goods Sold....(i+ii-iii) (b) | |
Gross Profit (a-b) | 27,900 |
Less : Operating Expenses | |
Fixed General and Admin Expenses | 7,400 |
Fixed Manufacturing Expenses (190 Units *$16 ) | 3,040 |
Operating Income | 17,460 |
Under Absorption costing, fixed costs are absorbed according to units sold and thus, costs are calculated on basis of units sold. However in variable costing, costs are segregated under fixed and variable costing and all costs are recognized in current period only. The main reason of difference between profits under absorption and variable costing is due to inventory valuation. Under absorption costing, valuation is higher due to inclusion of fixed costs in inventory. In variable costing, fixed costs are not included in inventory value.
2. Haigwood Company has 120 units in Finished Goods Inventory at the beginning of the accounting...
During the most recent year, Osterman Company had the following data: Units in beginning inventory Units produced 10,000 Units sold ($47 per unit) 9,300 Variable costs per unit: Direct materials Direct labor Variable overhead Fixed costs: Fixed overhead per unit produced Fixed selling and administrative $138,000 Required: 1. Calculate the cost of goods sold under absorption costing. 2. Prepare an income statement using absorption costing. Enter amounts as positive numbers. Osterman Company Income Statement under Absorption Costing For the Most...
The following data pertain to one month's operations of Whitney, Inc.: Units in Beginning Inventory - 0, Units Produced - 9,000, Units Sold - 8,000. VARIABLE COST PER UNIT: -- Manufacturing - $10, Selling and Administrative - $6. FIXED COSTS IN TOTAL: -- Manufacturing - $18,000, Selling and Administrative - $27,000. For the month noted, what was the relationship between the operating income under variable costing as opposed to under absorption costing? A) Higher than operating income under absorption costing....
During the most recent year, Osterman Company had the following data: Units in beginning inventory --- Units produced 11,350 Units sold ($50 per unit) 9,400 Variable costs per unit: Direct materials $10 Direct labor $5 Variable overhead $3 Fixed costs: Fixed overhead per unit produced $4 Fixed selling and administrative $138,500 1. Calculate the cost of goods sold under absorption costing. The cost of goods sold under the absorption costing method is ---------------------- 2. Prepare an income statement using absorption...
During the most recent year, Bledsoe Corp. had the following data: Beginning inventory in units - Units produced 14,500 Units sold ($120 per unit) 8,200 Variable costs per unit: Direct materials $ 13 Direct labor $ 16 Variable overhead $8 Fixed costs: Fixed overhead per unit produced $ 23 Fixed selling and administrative $ 135,000 Required: A. How many units are in ending inventory? B. Using absorption costing, calculate the per-unit product cost. What is the value of ending inventory?...
During the most recent year, Bledsoe Corp. had the following data: Beginning inventory in units - Units produced 14,500 Units sold ($120 per unit) 8,200 Variable costs per unit: Direct materials $ 13 Direct labor $ 16 Variable overhead $8 Fixed costs: Fixed overhead per unit produced $ 23 Fixed selling and administrative $ 135,000 Required: A. How many units are in ending inventory? B. Using absorption costing, calculate the per-unit product cost. What is the value of ending inventory?...
2) Peoria Company assembled the following data: Units in beginning inventory Units produced Units solod 5,000 4,500 $25 per unit $10 per unit Sales price Variable costs: Production Selling and administrative $4 per unit Fixed costs: Production Selling and administrative $15,000 $10,000 Calculate the following: a. Absorption costing product cost (cost per unit) b. Variable costing net income c. Absorption Costing Net Income
ZKB company manufactures a unique device that is used by internet users to boost Wi-Fi signals. The following data relates to the first month of operation: Beginning inventory: 0 units Units produced: 40,000 units Units sold: 35,000 units .Selling price: $120 per unit Marketing and administrative expenses Variable marketing and administrative expenses per unit $4 Fixed marketing and administrative expenses per month: $1,120,000 Manufacturing costs Direct materials cost per unit: $30 Direct labor cost per unit:$14 Variable manufacturing overhead cost...
Mountain Road Production Company has provided the following financial data for its most recent month. Unit Selling Price $22 Units in beginning inventory 0 Units produced 12,000 Units sold 10,000 Variable costs per unit: Direct materials $6 Direct labor $4 Manufacturing overhead $5 Selling and administrative costs $2 Fixed costs: Manufacturing overhead $12,000 Selling and administrative costs $10,000 Required: a) Calculate the unit product cost under variable costing. b) Calculate the unit product cost under absorption costing. c) Calculate the...
1. Compute the value of Outback Corporation’s 20x1 ending finished-goods inventory under absorption costing. (Do not round intermediate calculations.) 2. Compute the value of Outback Corporation’s 20x1 ending finished-goods inventory under variable costing. (Do not round intermediate calculations.) 3. Compute the difference between Outback Corporation’s 20x1 reported operating income calculated under absorption costing and calculated under variable costing. (Do not round intermediate calculations.) Outback Corporation manufactures tactical LED flashlights in Brisbane, Australia. The firm uses an absorption costing system for...
Burke Company produced 8,000 units of inventory and sold 6,000 of them. The company incurred the following production costs: Variable manufacturing cost: $6.00 per unit Fixed manufacturing overhead cost: $24,000 total Assuming the company sells its product at a price of $17 per unit, and incurred $10,000 in selling and administrative costs, what is the amount of net income under absorption costing? Select one: O A. $14,000 B. $26,000 C. $38,000 O D. $24,000