Question

Williamson Inc. manufactures digital voice recorders. During 2019, total costs associated with manufacturing 199,600 of the new EZ 9900 model (introduced this year) were as follows: Raw materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $1,767,200 2,952,500 745,000 786,900 Required: a. Calculate the cost per recorder under both variable costing and absorption costing. (Round your answers to 2 decimal places.) Cost per recorder Variable costing Absorption costing each each b-1. If 21,030 of these recorders were in finished goods inventory at the end of 2019, what is the total fixed cost associated with ending inventory? (Round your intermediate calculations to 2 decimal places and final answer to the whole number.) Total foxed cost associated with ending inventory

Answer 1

a) Variable costing cost per recorder :- Particulars Direct materials Direct labor Variable manufacturing overhead Total variable cost No of recorders manufactured Variable cost per recorder Amount $ 17,67,200 29,52,500 7,45,000 54,64,700 1,99,600 27.38 Absorbtion costing cost per recorder :- Particulars Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total absorbtion cost No of recorders manufactured Absorbtion cost per recorder Amount $ 17,67,200 29,52,500 7,45,000 7,06,900 61,71,600 1,99,600 30.92 b-1) Total fixed cost associated with ending inventory is = (Ending inventory*Fixed cost per recorder) Total fixed cost associated with ending inventory is = (21030*(706900/199600)) Total fixed cost associated with ending inventory is = $ 74,479.497. b-2) Operating Income Statement under Variable and Absorbtion costing system :- Variable Absorbtion Increase Particulars costing system costing system (Decrease) Cost of goods manufactured Less: Cost of ending inventory 54,65,048 61,71,632 (19960027.38) (199600*30.92) (5,75,801) (6,49,827) (21030-27.38) (21030*30.90) 48,89,247 55,21,805 Cost of goods sold (6,32,558) Under variable costing sytem cost of goods sold lower by $ 632,558 that of absorbtion costing system Variable costing sytem operating income will be higher by $ 632,558 that of absorbtion costing system c-1) Total cost = Fixed cost + Variable cost Total cost = 706900+(27.38*per digital voice recorder produced) c-2) Additional cost is = (Additional recorders*Variable cost per recorder) Additional cost is = (1660*27.38) Additional cost is = $ 45,450.80/.