Homework Answers
Solution 1:
In absorption costing when units manufactured > Units sold, then
Inventory - Finished goods inventory increases
The change in inventory is related to - "Allocation of fixed manufacturing overhead to ending inventory"
Hence last option is correct.
Solution 2:
If more units are produced then:
Absorption - Income will increase
Variable - Income will stay the same.
Hence last option is correct.
Add Answer to:
In absorption costing, When units manufactured > units sold, 1. then inventory 2. the change in inventory is related...
1. Compute the value of Outback Corporation’s 20x1 ending finished-goods inventory under absorption costing. (Do not...
1. Compute the value of Outback Corporation’s 20x1 ending
finished-goods inventory under absorption costing. (Do not round
intermediate calculations.)
2. Compute the value of Outback Corporation’s 20x1 ending
finished-goods inventory under variable costing. (Do not round
intermediate calculations.)
3. Compute the difference between Outback Corporation’s 20x1
reported operating income calculated under absorption costing and
calculated under variable costing. (Do not round intermediate
calculations.)
Outback Corporation manufactures tactical LED flashlights in Brisbane, Australia. The firm uses an absorption costing system for...
Reliable Inc. uses absorption costing in a FIFO inventory system.Reliable had opening inventory of 150 units...
Reliable Inc. uses absorption costing in a FIFO inventory system.Reliable had opening inventory of 150 units at a cost of $35 per unit. Ending inventory is 110 units. During 2017 Reliable sold 1,500 units at $55 each. The following costs apply to Reliable's operations for the year ended December 31, 2017. Direct material used in production $ 14 per unit Direct labour incurred 6 per unit Fixed manufacturing overhead $ 16,050 Variable manufacturing overhead $ 6 per unit Selling costs...
Exercise 06-1 Computing unit and inventory costs under absorption costing LO P1 Trio Company reports the...
Exercise 06-1 Computing unit and inventory costs under absorption costing LO P1 Trio Company reports the following information for the current year, which is its first year of operations. 15 per unit 16 per unit Direct materials Direct labor Overhead costs for the year Variable overhead Fixed overhead Units produced this year Units sold this year Ending finished goods inventory in units 4 per unit $ 160,000 per year 20,000 units 14,000 units 6,000 units 1. Compute the product cost...
Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending...
Estimated Income Statements, using Absorption and Variable Costing Prior to the first month of operations ending October 31 Marshall Inc. estimated the following operating results: Sales (13,600 x $48) $652,800 Manufacturing costs (13,600 units): Direct materials 393,040 Direct labor 92,480 Variable factory overhead 43,520 Fixed factory overhead 51,680 Fixed selling and administrative expenses 14,100 Variable selling and administrative expenses 17,000 The company is evaluating a proposal to manufacture 15,200 units instead of 13,600 units, thus creating an Inventory, October 31...
Complete Absorption Costing vs. Variable Costing Income statements for Randeris Company, Year 1 & Year 2....
Complete Absorption Costing vs. Variable Costing Income
statements for Randeris Company, Year 1 & Year 2.
RANDERIS COMPANY - YEAR ONE 30,000 25,000 30 $ $ 10 Number of units produced Number of units sold Unit sales price Variable costs per unit: Direct materials, direct labor variable mfg. overhead Selling & administrative expenses Fixed costs per year: Manufacturing overhead Selling & administrative expenses $ 3 $ 150,000 $100,000 RANDERIS COMPANY - YEAR TWO 20,000 25,000 5,000 30 $ Number of...
Dodner Company uses an absorption costing system in accounting for the single product it manufactures. The...
Dodner Company uses an absorption costing system in accounting for the single product it manufactures. The following selected data are for the year 2020: Sales (20,000 $720,000 units) Direct materials $259,200 used Direct labor $86,400 costs Variable manufacturing $25,920 overhead Fixed manufacturing $34,560 overhead $43,200 Variable selling and administrative expenses Fixed selling and administrative expenses $144,000 The company produced 24,000 units and sold 20,000 units in 2020. Direct materials and direct labor are variable costs. One unit of direct material...
Exercise 18-26B Computing absorption costing income LO P5 A manufacturer reports the information below for three...
Exercise 18-26B Computing absorption costing income LO P5 A manufacturer reports the information below for three recent years. Variable costing income Beginning finished goods inventory (units) Ending finished goods inventory (units) Fixed manufacturing overhead per unit Year 1 Year 2 Year 3 $115,000 $119,400 $123,950 0 1,450 950 1,450 950 1,050 $ 3.00 $ 3.00 $ 3.00 Compute income for each of the three years using absorption costing. Year 2 Year 3 Year 1 115,000 $ 119,400 $ 123,950 Variable...
Exercise 18-26B Computing absorption costing income LO P5 A manufacturer reports the information below for three...
Exercise 18-26B Computing absorption costing income LO P5 A manufacturer reports the information below for three recent years. ek Variable costing income Beginning finished goods inventory (units) Ending finished goods inventory (units) Fixed manufacturing overhead per unit Year 1 Year 2 Year 3 $115,000 $119,400 $123,950 0 1,450 950 1,450 950 1,050 $ 3.00 $ 3.00 $ 3.00 at ences Compute income for each of the three years using absorption costing. Year 1 ear 2 Year 3 Variable costing income...
Calculator Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs...
Calculator Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 Sales $1,280,000 $840,000 (168,000) Cost of goods sold: Cost of goods manufactured Ending inventory Total cost of goods sold Gross profit Selling and administrative expenses Operating income (672,000) $608,000 (305,000) $303,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable...
Unit Costs, Inventory Valuation, Variable and Absorption Costing Snyder Company produced 80,900 units during its first...
Unit Costs, Inventory Valuation, Variable and Absorption Costing Snyder Company produced 80,900 units during its first year of operations and sold 77,100 at $21.60 per unit. The company chose practical activity—at 80,900 units—to compute its predetermined overhead rate. Manufacturing costs are as follows: Direct materials $457,085 Direct labor 87,372 Expected and actual variable overhead 300,139 Expected and actual fixed overhead 432,006 Required: If required, round unit cost answers to the nearest cent. 1. Calculate the unit cost and the cost...
1. Compute the value of Outback Corporation’s 20x1 ending
finished-goods inventory under absorption costing. (Do not round
intermediate calculations.)
2. Compute the value of Outback Corporation’s 20x1 ending
finished-goods inventory under variable costing. (Do not round
intermediate calculations.)
3. Compute the difference between Outback Corporation’s 20x1
reported operating income calculated under absorption costing and
calculated under variable costing. (Do not round intermediate
calculations.)
Outback Corporation manufactures tactical LED flashlights in Brisbane, Australia. The firm uses an absorption costing system for...
Exercise 06-1 Computing unit and inventory costs under absorption costing LO P1 Trio Company reports the following information for the current year, which is its first year of operations. 15 per unit 16 per unit Direct materials Direct labor Overhead costs for the year Variable overhead Fixed overhead Units produced this year Units sold this year Ending finished goods inventory in units 4 per unit $ 160,000 per year 20,000 units 14,000 units 6,000 units 1. Compute the product cost...
Complete Absorption Costing vs. Variable Costing Income
statements for Randeris Company, Year 1 & Year 2.
RANDERIS COMPANY - YEAR ONE 30,000 25,000 30 $ $ 10 Number of units produced Number of units sold Unit sales price Variable costs per unit: Direct materials, direct labor variable mfg. overhead Selling & administrative expenses Fixed costs per year: Manufacturing overhead Selling & administrative expenses $ 3 $ 150,000 $100,000 RANDERIS COMPANY - YEAR TWO 20,000 25,000 5,000 30 $ Number of...
Dodner Company uses an absorption costing system in accounting for the single product it manufactures. The following selected data are for the year 2020: Sales (20,000 $720,000 units) Direct materials $259,200 used Direct labor $86,400 costs Variable manufacturing $25,920 overhead Fixed manufacturing $34,560 overhead $43,200 Variable selling and administrative expenses Fixed selling and administrative expenses $144,000 The company produced 24,000 units and sold 20,000 units in 2020. Direct materials and direct labor are variable costs. One unit of direct material...
Exercise 18-26B Computing absorption costing income LO P5 A manufacturer reports the information below for three recent years. Variable costing income Beginning finished goods inventory (units) Ending finished goods inventory (units) Fixed manufacturing overhead per unit Year 1 Year 2 Year 3 $115,000 $119,400 $123,950 0 1,450 950 1,450 950 1,050 $ 3.00 $ 3.00 $ 3.00 Compute income for each of the three years using absorption costing. Year 2 Year 3 Year 1 115,000 $ 119,400 $ 123,950 Variable...
Exercise 18-26B Computing absorption costing income LO P5 A manufacturer reports the information below for three recent years. ek Variable costing income Beginning finished goods inventory (units) Ending finished goods inventory (units) Fixed manufacturing overhead per unit Year 1 Year 2 Year 3 $115,000 $119,400 $123,950 0 1,450 950 1,450 950 1,050 $ 3.00 $ 3.00 $ 3.00 at ences Compute income for each of the three years using absorption costing. Year 1 ear 2 Year 3 Variable costing income...
Calculator Absorption Statement Absorption costing does not distinguish between variable and fixed costs. All manufacturing costs are included in the cost of goods sold. Saxon, Inc. Absorption Costing Income Statement For the Year Ended December 31 Sales $1,280,000 $840,000 (168,000) Cost of goods sold: Cost of goods manufactured Ending inventory Total cost of goods sold Gross profit Selling and administrative expenses Operating income (672,000) $608,000 (305,000) $303,000 Variable Statement Under variable costing, the cost of goods manufactured includes only variable...
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