Question

13) Jimmy Industries Inc. reported the following information about the production and sale of its only product during the first month of operations: Selling price per unit $65.00 Sales $78,000 Direct materials used $25,000 Direct labor $42,000 Variable factory overhead $17,000 Fixed factory overhead ? Variable selling and administrative expenses $3,000 Fixed selling and administrative expenses $5,000 Gross profit $30,000 Production volume variance 0 The company sold one-half of the units it produced. The company uses absorption costing. Fixed factory overhead costs included in the ending inventory of finished goods are ________.

Answer 1

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Sale Value		$ 78,000
Selling price per unit		$         65
Hence, no of Units Sold	78000/65	1,200	Units
Company sold half of the units produced, Hence Production is	1200*2	2,400	Units
Sales	1200 Units	$ 78,000
Less:
Direct Materials	$ 25,000/2400*1200	$ -12,500
Direct Labor	$ 42,000/2400*1200	$ -21,000
Variable Overheads	$ 17,000/2400*1200	$   -8,500
Fixed Overheads		Lets say X
Gross Profit		$ 30,000
Hence X or Fixed Overheads=		$    6,000
78000-12500-21000-8500-30000
Fixed overheads in Ending Inventory will be same since Sale=Ending Inventory		$    6,000