Homework Answers
Ending inventory of finished goods in variable costing = variable manufacturing cost x ending inventory units/Total units produced
= 10,000 x 400/5,000
= $800
Ending inventory of finished goods in absorption costing = Total manufacturing costs x Ending inventory units / Total units produced
= 16,800 x 400/5,000
= $1,344
Thus, ending inventory is $544 higher in absorption costing. Due to higher ending inventory, cost of goods sold will be lower in absorption costing and thus operating income will be higher by $544 in absorption costing as compared to variable costing.
Correct option is B.
Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.
Thanks
Add Answer to:
During the last year, Moore Company's total variable production costs were $10,000, and its total fixed...
Last year, Silver Company's total variable production costs were $7,500, and its total fixed manufacturing overhead...
Last year, Silver Company's total variable production costs were $7,500, and its total fixed manufacturing overhead costs were $4,500. The company produced 3,000 units during the year and sold 2,400 units. There were no units in the beginning inventory. Which of the following statements is true? Under variable costing, the average cost of the units in the ending inventory will be $4 each. The operating income under absorption costing for the year will be $900 lower than the operating income...
Krepps Corporation produces a single product. Last year, Krepps manufactured 35,040 units and sold 29,600 units....
Krepps Corporation produces a single product. Last year, Krepps manufactured 35,040 units and sold 29,600 units. Production costs for the year were as follows: Direct materials $ 266,304 Direct labor $ 157,680 Variable manufacturing overhead $ 297,840 Fixed manufacturing overhead $ 385,440 Sales totaled $1,450,400 for the year, variable selling and administrative expenses totaled $156,880, and fixed selling and administrative expenses totaled $255,792. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the...
Krepps Corporation produces a single product. Last year, Krepps manufactured 30,030 units and sold 24,700 units....
Krepps Corporation produces a single product. Last year, Krepps manufactured 30,030 units and sold 24,700 units. Production costs for the year were as follows: Direct materials $ 243,243 Direct labor $ 126,126 Variable manufacturing overhead $ 237,237 Fixed manufacturing overhead $ 420,420 Sales totaled $1,272,050 for the year, variable selling and administrative expenses totaled $133,380, and fixed selling and administrative expenses totaled $195,195. There was no beginning inventory. Assume that direct labor is a variable cost. Under variable costing, the...
Exercise 17.30 Asian Iron began last year with no inventories. During the year, 10,500 units were...
Exercise 17.30 Asian Iron began last year with no inventories. During the year, 10,500 units were produced, of which 9,400 were sold. Data concerning last year's operations appear here (in New Taiwanese dollars, NT$): Revenue Variable direct materials costs Variable direct labour costs Variable manufacturing overhead Variable selling Fixed manufacturing overhead Fixed selling and administrative costs NT$ 32,900 2,300 3,300 2,800 940 8,250 14,560 Variable manufacturing costs reflect the variable cost to produce the number of units manufactured. However, variable...
Calculator Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs...
Calculator Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 Sales $1,280,000 $840,000 (168,000) Cost of goods sold: Cost of goods manufactured Ending inventory Total cost of goods sold Gross profit Selling and administrative expenses Operating income (672,000) $608,000 (305,000) $303,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable...
Exercise 17.30 Splish Iron began last year with no inventories. During the year, 10,700 units were...
Exercise 17.30 Splish Iron began last year with no inventories. During the year, 10,700 units were produced, of which 9,500 were sold. Data concerning last year's operations appear here in New Taiwanese dollars, NTS): Revenue NT$ 33,820 Variable direct materials costs 2,247 Variable direct labour costs 3,638 Variable manufacturing overhead 2,782 Variable selling 950 Fixed manufacturing overhead 8,300 Fixed selling and administrative costs 14,858 Variable manufacturing costs reflect the variable cost to produce the number of units manufactured. However, variable...
Feldspar, Inc. started the year with 200 units in the Finished Goods Inventory account. It produced...
Feldspar, Inc. started the year with 200 units in the Finished Goods Inventory account. It produced 600 units during the year and sold 800 units. If Feldspar uses variable costing. A) its operating income will be the same as under absorption costing its value of ending Finished Goods Inventory reported in the balance sheet will be B) higher than under absorption costing C) its operating income for the period will be lower than under absorption costing D) its operating income...
Last year, Richmon Company produced 10,000 units and sold 6,000 units at a price of $20....
Last year, Richmon Company produced 10,000 units and sold 6,000 units at a price of $20. Costs for last year were as follows: Direct materials $30,000 Direct labor 38,000 Variable factory overhead 8,000 Fixed factory overhead 40,000 Variable selling expense 5,000 Fixed selling expense 4,900 Fixed administrative expense 11,000 Fixed factory overhead is applied based on expected production. Last year, Richmon expected to produce 10,000 units. What is operating income for last year under absorption costing? a. $55,000 b. $39,000...
Great Bay Co. manufactures cordless telephones. During 2016, total costs associated with manufacturing 18,500 of the...
Great Bay Co. manufactures cordless telephones. During 2016, total costs associated with manufacturing 18,500 of the AB-2000 model (introduced this year) were as follows: Raw materials $ 195,175 Direct labor 115,625 Variable manufacturing overhead 85,100 Fixed manufacturing overhead 114,700 (a.) Calculate the cost per phone under both direct (or variable) costing and absorption costing. (b.) If 2,800 of these phones were in finished goods inventory at the end of 2016, by how much and in what direction (higher or lower)...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative 14 3 1 $290,000 $200,000 During the year, the company produced 29,000 units and sold 22,000 units. The selling price of the company's product is $42 per unit. Required: 1. Assume that the...
Exercise 17.30 Asian Iron began last year with no inventories. During the year, 10,500 units were produced, of which 9,400 were sold. Data concerning last year's operations appear here (in New Taiwanese dollars, NT$): Revenue Variable direct materials costs Variable direct labour costs Variable manufacturing overhead Variable selling Fixed manufacturing overhead Fixed selling and administrative costs NT$ 32,900 2,300 3,300 2,800 940 8,250 14,560 Variable manufacturing costs reflect the variable cost to produce the number of units manufactured. However, variable...
Calculator Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 Sales $1,280,000 $840,000 (168,000) Cost of goods sold: Cost of goods manufactured Ending inventory Total cost of goods sold Gross profit Selling and administrative expenses Operating income (672,000) $608,000 (305,000) $303,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable...
Exercise 17.30 Splish Iron began last year with no inventories. During the year, 10,700 units were produced, of which 9,500 were sold. Data concerning last year's operations appear here in New Taiwanese dollars, NTS): Revenue NT$ 33,820 Variable direct materials costs 2,247 Variable direct labour costs 3,638 Variable manufacturing overhead 2,782 Variable selling 950 Fixed manufacturing overhead 8,300 Fixed selling and administrative costs 14,858 Variable manufacturing costs reflect the variable cost to produce the number of units manufactured. However, variable...
Feldspar, Inc. started the year with 200 units in the Finished Goods Inventory account. It produced 600 units during the year and sold 800 units. If Feldspar uses variable costing. A) its operating income will be the same as under absorption costing its value of ending Finished Goods Inventory reported in the balance sheet will be B) higher than under absorption costing C) its operating income for the period will be lower than under absorption costing D) its operating income...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative 14 3 1 $290,000 $200,000 During the year, the company produced 29,000 units and sold 22,000 units. The selling price of the company's product is $42 per unit. Required: 1. Assume that the...
Most questions answered within 3 hours.
-
Part 3: Arrows
Write a python program that prompts the user for a number of
columns,...
asked 6 minutes ago -
Need help answering these questions!!
1. What economic concept do you find most interesting in
Macroeconomics?...
asked 10 minutes ago -
1. Nimbus, Inc. produces and sells brooms. This table shows the
relationship between the number of...
asked 13 minutes ago -
A gas occupies 200. mL in a piston. If the pressure of the
piston were decreased...
asked 30 minutes ago -
A fossil is found to have a 14C level of 71.0% compared to
living organisms. How...
asked 34 minutes ago -
Many communist or socialist countries have a department that
addresses public health as well as the...
asked 36 minutes ago -
the following questions are either true or false answers
1. The Central Limit Theorem allows one...
asked 36 minutes ago -
The patient recovery time from a particular surgical procedure
is normally distributed with a mean of...
asked 42 minutes ago -
Human relations refer to the way a company arranges people,
jobs, and communications so that work...
asked 59 minutes ago -
Python Program: Design the logic for and implement a program
that merges the two files into...
asked 57 minutes ago -
The specific radiocarbon activity of a sample of wood is 6.25
gms dpm/gm of carbon. The...
asked 1 hour ago -
An aqueous magnesium chloride solution is made by dissolving
6.96 moles of MgCl2 in sufficient water...
asked 1 hour ago