Homework Answers
1) Income using absorption costing method
| Sales (80000*20) | $ 16,00,000 | |
| Less: Costs of goods sold | ||
| Direct material cost (100000*4) | $ 4,00,000 | |
| Direct labor cost (100000*3) | $ 3,00,000 | |
| Direct variable cost (100000*2) | $ 2,00,000 | |
| Fixed manufacturing overhead | $ 5,00,000 | |
| Total manufactuing costs | $ 14,00,000 | |
| Less: Closing stock (1300000*20000/100000) | $ 2,80,000 | |
| Cost of goods sold | $ 11,20,000 | |
| Gross profit | $ 4,80,000 | |
| Less: Selling and administrative costs | ||
| Variable costs (80000*1) | $ 80,000 | |
| Fixed costs | $ 1,60,000 | |
| Total selling and administrative costs | $ 2,40,000 | |
| Net Income | $ 2,40,000 |
2) Income using variable costing method
| Sales (80000*20) | $ 16,00,000 | |
| Less: Variable costs of goods sold | ||
| Direct material cost (100000*4) | $ 4,00,000 | |
| Direct labor cost (100000*3) | $ 3,00,000 | |
| Direct variable cost (100000*2) | $ 2,00,000 | |
| Total variable manufactuing costs | $ 9,00,000 | |
| Less: Closing stock (900000*20000/100000) | $ 1,80,000 | |
| Variable cost of goods sold | $ 7,20,000 | |
| Variable selling and administrative costs (80000*1) | $ 80,000 | |
| Contribution margin | $ 8,00,000 | |
| Fixed manufacturing cost | $ 5,00,000 | |
| Fixed selling and administrative cost | $ 1,60,000 | $ 6,60,000 |
| Net Income | $ 1,40,000 |
3)
| Net income as per absorption costing | $ 2,40,000 |
| Net income as per variable costing | $ 1,40,000 |
| Difference | $ 1,00,000 |
| Fixed manufacturing cost | $ 5,00,000 |
| No of units produced | $ 1,00,000 |
| Fixed manufacturing cost per unit | $ 5 |
| Closing stock | 20000 |
| Fixed manufacturing cost relating to closing stock (20000*5) | $ 1,00,000 |
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Please help me answer these questions!
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Please help me answer these questions!
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Please Help
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