Question

Exercise 5-11 to Exercise 5-18 Tri Town Manufacturing produces snow shovels. The selling price per snow shovel is $28.00. There is no beginning inventory. Costs involved in production are: Direct material $6.00 Direct labor 4.00 Variable manufacturing overhead 4.00 Total variable manufacturing costs per unit $14.00 Fixed manufacturing overhead per year $196,560 In addition, the company has fixed selling and administrative costs of $170,900 per year. During the year, Tri Town produces 50,400 snow shovels and sells 45,390 snow shovels.

What is the value of ending inventory using full costing? Value of ending inventory $ LINK TO TEXT

What is the value of ending inventory using variable costing? Value of ending inventory $ LINK TO TEXT

Calculate the difference in full costing net income and variable costing net income without preparing either income statement. Difference in net income $ LINK TO TEXT LINK TO TEXT

What is cost of goods sold using full costing? Cost of goods sold $ LINK TO TEXT

What is cost of goods sold using variable costing? Variable cost of goods sold $ LINK TO TEXT LINK TO TEXT

What is net income using full costing? Net income LINK TO TEXT LINK TO TEXT

What is net income using variable costing? Net income $ LINK TO TEXT

How much fixed manufacturing overhead is in ending inventory under full costing? Fixed manufacturing overhead in ending inventory $ Compare this amount to the difference in the net incomes calculated in Exercise 5-13. The amount of fixed manufacturing overhead in ending inventory under full costing is greater thanequal toless than the difference in net income between full costing and variable costing.

Answer 1

		unit product cost
				Absorption	Variable
	Direct materials			6	6
	Direct labor			4	4
	Variable MOH			4	4
	Fixed MOH	(196560/50400)		3.9
	total unit product cost			17.9	14
1)	Value of ending inventory using full costing
	5010*17.9
	89679
2)	Value of ending inventory using variable costing
	5010*14
	70140
3)	difference in full costing net income and variable costing net income
	19539
4)	cost of goods sold using full costing
	45390*17.9
	812481
5)	Variable cost of goods sold
	45390*14
	635460
6)	Net income using full costing
	Sales	(45390*28)			1270920
	cost of goods sold				812481
	gross profit				458439
	Selling and administrative expense				170,900
	Net income using full costing				287,539
7)	net income using variable costing
	Sales				1270920
	cost of goods sold(variable)				635460
	gross profit				635460
	Fixed manufacturing overhead				196,560
	Selling and administrative expense				170,900
	Net income using full costing				268,000
8)	Fixed manufacturing overhead in ending inventory under full costing
	5010*3.9
	19539
	the amount of FMOH in ending inventory under full costing is
	equal to	the difference in net income between full costing and
	variable costing