Question

#1

Inventory Valuation under Absorption Costing During the most recent year, Judson Company had the following data associated with the product it makes: 300 Units in beginning inventory Units produced 15,000 Units sold ($300 per unit) 12,700 Variable costs per unit: Direct materials Direct labor Variable overhead Fixed costs: Fixed overhead per unit produced $30 Fixed selling and administrative $140,000 Required: 1. How many units are in ending inventory? 2. Using absorption costing, calculate the per-unit product cost. $ 3. What is the value of ending inventory under absorption costing? $

#2

Absorption-Costing Income Statement

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	$9
Direct labor	$6
Variable overhead	$4
Fixed costs:
Fixed overhead per unit produced	$5
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 Recent Year
	$
	$
	$

(Please show work)

Answer 1

1a) Ending inventory Unit = 300+15000-12700 = 2600 Units

1b) Unit cost under variable costing = 20+60+12 = 92

1c) Cost of ending inventory = 2600*92 = $239200

2a) Cost of goods sold = (9+6+4+5)*9300 = 223200

2. Prepare an income statement using absorption costing. Enter amounts as positive numbers.

Osterman Company
Income Statement under Absorption Costing
For the Most Recent Year
Sales revenue (9300*47)	$437100
Cost of goods sold	223200
Gross profit	$213900
Selling and administrative expense	138000
Net income	$75900