Columbia Corporation produces a single product. The company\'s variable costing
ID: 2430159 • Letter: C
Question
Columbia Corporation produces a single product. The company's variable costing income statement for November appears below: Columbia Corporation Income Statement For the Month ended November 30 Sales ($20 per unit) $ 854,000? Variable expenses: Variable cost of goods sold 555,100? Variable selling expense 128,100? Total variable expenses 683,200? Contribution margin 170,800? Fixed expenses: Manufacturing 105,570? Selling and administrative 35,190? Total fixed expenses 140,760? Net operating income $ 30,040? During November, 35,190 units were manufactured and 8750 units were in beginning inventory. Variable production costs have remained constant on a per unit basis over the past several months. The value of the company's inventory on November 30 under absorption costing would be:
Explanation / Answer
Absorption costing:
Value of inventory on November 30 under absorption costing = 1240 units x $16 = $19840
Beginning inventory (units) 8750 Add: Manufactured during the month 35190 Total units available for sale 43940 Less: Sales ($854000/$20) 42700 Ending inventory (units) 1240