Question

Richetti produces stereo speakers. The selling price per pair of speakers is $1,800. There is no beginning inventory. Costs involved in production are: Direct material $161 Direct labor 183 Variable manufacturing overhead 107 Total variable manufacturing costs per unit $451 Fixed manufacturing overhead per year $594,000 In addition, the company has fixed selling and administrative costs: Fixed selling costs per year $200,500 Fixed administrative costs per year $102,400 During the year, Richetti produces 1,500 pairs of speakers and sells 1,200 pairs.

What is net income using full costing?

Net income $_____

Answer 1

Amounts 161.00 Unit product cost under Full costing :- Particulars Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead (594000/1500) Unit product cost 183.00 107.00 396.00 847.00 Amounts 2,160,000 Determination of Net Income under Full costing system: Cost of goods sold Sales (1200*18000 Less: Cost of goods sold Beginning inventory Add: Cost of goods manufactured (1500*847) Goods available for sales Less: Ending inventory (300*847) Cost of goods sold Gross margin Less: Selling and Admin expenses 1,270,500 1,270,500 254,100 1,016,400 1,143,600 102,400 200,500 Fixed administrative costs Fixed selling costs Total Fixed expenses Net Income 302,900 840,700