In preparing for a meeting the controller accumulated the following data. Beginn
ID: 2365342 • Letter: I
Question
In preparing for a meeting the controller accumulated the following data. Beginning inventory 25,000 Units produced 100,000 Units sold 105,000 Fixed manufacturing overhead $400,000 Direct materials per unit $25.00 Direct labor per unit $35.00 Variable manufacturing overhead per unit $15.00 A. Computer the cost per unit, using absorption costing. B. Computer the cost per unit, using variable costing. C. Computer the difference in net income between the two methods. Which costing method results in the higher net operating income? D. Assume that production was 100,000 units and sales were 70,000 units. What would be the difference in the methods? Which costing method shows the greater net operating income? E. Assume that production was 100,000 units and sales were 100,000 units. What would be the two methods? F. Which methods is required by generally accepted accounting principles?Explanation / Answer
A. Computer the cost per unit, using absorption costing.
The cost per unit is as follows:
Materials 25.00
Labor 35.00
Variable Man.OH 15.00
Fixed Man. OH 4.00 (400000/100000)
Total 79.00
B. Computer the cost per unit, using variable costing.
Materials 25.00
Labor 35.00
Variable Man.OH 15.00
Total 75.00
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