Craft Company produces a single product. Last year, the company had a net operat
ID: 2378726 • Letter: C
Question
Craft Company produces a single product. Last year, the company had a net operating income of $97,420 using absorption costing and $83,100 using variable costing. The fixed manufacturing overhead cost was $8 per unit. There were no beginning inventories. If 25,600 units were produced last year, then sales last year were:
Craft Company produces a single product. Last year, the company had a net operating income of $97,420 using absorption costing and $83,100 using variable costing. The fixed manufacturing overhead cost was $8 per unit. There were no beginning inventories. If 25,600 units were produced last year, then sales last year were:
Explanation / Answer
UNITS PRODUCED = 25600
FIXED MANUF COST = 8 PER UNIT
TOTAL FIXED MANUF COST = 8*25600 = 204800
PROFIT AS PER VARIABLE COSTING = 83100
VC PROFIT+ CLOSING STOCK VALUE = AB COSTING PROFIT
CLOSING STOCK = 97420 - 83100 = 14320
UNITS OF CL STOCK = 14320/8 = 1790
SALES = 25600-1790 = 23810