I know the answers, I need exact steps for each questions. 1. In 2009 Voest Inc’
ID: 2491487 • Letter: I
Question
I know the answers, I need exact steps for each questions.
1. In 2009 Voest Inc’s income under absorption costing was $15,000 higher than its income under variable costing. During the year, the company produced 20,000 units. If total variable production costs were $80,000 and fixed manufacturing overhead was $40,000, how many units did the company sell in 2009?
2.Blake Company produces a single product. Last year, Blake's net operating income under absorption costing was 3600 lower than under variable costing. The company sold 10,000 units during the years, and its variable costs were $9 per unit which included $1 variable selling expense. if production cost was $11 per unit under aborption costing, then how many units did the company produce during the years?
Explanation / Answer
Under absorption costing, normal manufacturing costs are considered product costs and included in inventory, whether those costs relate to direct materials, direct labor, variable manufacturing overhead, or fixed manufacturing overhead.
So per the above definition the fixed manufacturing overhead amount of 40,000 will be inventoried under the absorption costing alone with the variable cost of 80,000.
The fixed cost is $2 constant per unit and therefore since the income statement show 15,000 net income then the fixed cost allocated to the P&L was less by 15,000.
The equation is 40,000 -15,000= 25,0000 fixed cost allocated to the P&L and divide 25,000 by 2 Fixed cost per unit= 12,500 units sold in 2006.
Under absorption costing, normal manufacturing costs are considered product costs and included in inventory, whether those costs relate to direct materials, direct labor, variable manufacturing overhead, or fixed manufacturing overhead.
So per the above definition the fixed manufacturing overhead amount of 40,000 will be inventoried under the absorption costing alone with the variable cost of 80,000.
The fixed cost is $2 constant per unit and therefore since the income statement show 15,000 net income then the fixed cost allocated to the P&L was less by 15,000.
The equation is 40,000 -15,000= 25,0000 fixed cost allocated to the P&L and divide 25,000 by 2 Fixed cost per unit= 12,500 units sold in 2006.
Direct material + Direct labor + Variable manufacturing overhead= Variable unit product cost = $9 – $1 = $8
Unit fixed manufacturing overhead = $11 – $8 = $3
Difference in net income between methods ÷ Unit fixed manufacturing overhead =($3,600) ÷ $3 per unit
= (1,200) units
Units produced = Units sold + Change in inventory = 10,000 + (1,200) = 8,800