Carr Company produces a single product. Last year, Carr manufactured 29,010 unit
ID: 2489136 • Letter: C
Question
Carr Company produces a single product. Last year, Carr manufactured 29,010 units and sold 23,900 units Production costs for the year were as follows $319,110 $243,68 Flxed manufacturing overhead Varlable manufacturing overhead Direct labor Direct materlals 1218 214,6554 Sales were $1,159,150, for the year, varlable selling and administrative expenses were $126,670, and fixed selling and administrative expenses were $205,971. There was no beginning Inventory. Assume that direct labor Is a varlable cost. Under variable costing,the company's net operating Income for the year would be $30,149 lower than under absorption costing $30,149 higher than under absorption costing $56,210 lower than under absorption costing $56,210 higher than under absorption costingExplanation / Answer
(1) Carr company : Under Vaiable Costing the Company's Operating Income of the year would be $56,210 lower than the income under Absorption Costing. (Variable Coting Income= $29,399 & Absorption Costing Income =$85,609)
(2) Khanam Corporation: Product Cost would be $102 per unit. ($176,850/6,550) + $17+ $47+$11= $102
(3) Guuitian Corporation Net Operating Income = $36,400
(4) Tietz Corporation : Change in Net Oprating Income = $419,150- $357,000 = $62,150
Absorbtion Costing Method Units Amount ($) Amount ($) a Sales 23,900 1,159,150 b Production Costs: i) Direct Labour 121,842 ii) Direct Labour 214,674 iii) Variable Manuf. Overhead 243,684 iv) Fixed Manuf. Overhead 319,110 Total 29,010 899,310 c Less: Closing inventory 5,110 158,410 d Production cost Charged to sales ( b-c) 740,900 e Selling & Admin Expenses i) Variable 126,670 ii) Fixed 205,971 Total Selling & Admin Exp. (i+ii) 332,641 f Total Cost of Sales ( d+e) 1,073,541 g Net Operating Income (a -f) 85,609 Variable Costing Method Units Amount($) Amount ($) a Sales 23,900 1,159,150 b Variable Production Costs i) Direct Labour 121,842 ii) Direct Labour 214,674 iii) Variable Manuf. Overhead 243,684 Total 29,010 580,200 c Less: Closing inventory 5,110 102,200 d Production cost of sales ( b-c) 478,000 e Variable Selling & Admin Exp. 126,670 f Total Variable costs charged to Sales (d+e) 23900 604,670 g Fixed Costs i) Fixed Manuf. Overhead 319,110 ii) Fixed Selling & Admin Exp. 205,971 Fixed Cost charded to Sales ( i+ii) 525,081 h Total Cost of Sales ( f +g ) 23900 1,129,751 i Net Operating Income (a -h) 23900 29,399