McDc x Exercise E 11 11 Page 45 x n.do?invoker-assignmentstakeAssignmentSessionL
ID: 2548738 • Letter: M
Question
McDc x Exercise E 11 11 Page 45 x n.do?invoker-assignmentstakeAssignmentSessionLocatore assignment-tak E New Tab Dashboard Caculator Inventory Valuation under Absorption Costing and Variable Costing At the end of the first year of operations, 4,900 unit Direct materials Direct labor Fixed factory overhead Variable factory overhead Determine the cost of the finished goods inventory reported on the balance sheet under (a) the absorption costing concept and (b) the variable costing con.cept. Absorption costing Variable costing s remained in the finished goods inventory. The unit manufacturing costs during the year were as follows: $33.90 13.30 6.00Explanation / Answer
Absorption costing 286650 Variable costing 257250 Working: Cost per unit Direct material A 33.90 Direct labor B 13.30 Variable Factory overhead C 5.30 Cost per unit under variable costing (A+B+C) D 52.50 Fixed Factory Overhead E 6.00 Cost per unit under variable costing (A+B+C+E) F 58.50 Inventory of finished goods - units G 4900 Value of finished goods under variable costing (D X G) 257250 Value of finished goods under absorption costing (F X G) 286650 BLUTH COMPANY Variable costing income statement Sales 250740 Variable expenses: Cost of products sold 67700 Marketing, Administrative andother expenses 32600 Total variable expenses 100300 Contribution margin 150440 Fixed expenses: Cost of products sold 52660 Marketing, Administrative andother expenses 47640 Total fixed expenses 100300 Income from operations 50140 MARSHALL INC. Absorption Costing Income Statement For the month ending October 31 Production 12800 14400 Sales units 12800 12800 Per unit Total Per unit Total Sales 45.00 576000 45.00 576000 Direct material 27.40 350720 27.40 394560 Direct labor 6.50 83200 6.50 93600 Variable factory overheads 3.00 38400 3.00 43200 Fixed factory overheads 46080 46080 Cost of manufacture 40.50 518400 40.10 577440 Add: Beginning inventory 0 0 Cost of goods available for sale 518400 577440 Less: Ending Inventory 0 64160 Cost of Goods Sold 518400 513280 Gross Profit 57600 62720 Selling and administrative expenses Variable selling and administrative expenses 1.19 15200 1.19 15200 Fixed selling and administrative expenses 12500 12500 Total selling and administrative expenses 27700 27700 Income from operaions 29900 35020 MARSHALL INC. Variable Costing Income Statement For the month ending October 31 Production 12800 14400 Sales units 12800 12800 Per unit Total Per unit Total Sales 45.00 576000 45.00 576000 Variable expenses Direct material 27.40 350720 27.40 394560 Direct labor 6.50 83200 6.50 93600 Variable factory overheads 3.00 38400 3.00 43200 Cost of manufacture 472320 531360 Add: Beginning inventory 0 0 Cost of goods available for sale 472320 531360 Less: Ending Inventory 0 59040 Cost of goods sold 472320 472320 Variable selling and administrative expenses 1.19 15200 1.19 15200 Total Variable expenses 487520 487520 Contribution margin 88480 88480 Fixed expenses Fixed factory overheads 46080 46080 Fixed selling and administrative expenses 12500 12500 Total fixed expenses 58580 58580 Income from operaions 29900 29900 Working: Production units 14400 per unit Total Direct material 27.40 394560 Direct labor 6.50 93600 Variable factory overhead 3.00 43200 Total manufacturing cost 36.90 531360 Ending inventory 1600 59040