Question

Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0...

Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.

Units produced this year

40,000

units

Units sold this year

24,000

units

Direct materials

$

24

per unit

Direct labor

$

26

per unit

Variable overhead

$

120,000

in total

Fixed overhead

$

200,000

in total

1.

Given Advanced Company's data, compute cost of finished goods in inventory under variable costing.

Multiple Choice



  • $928,000


  • $2,320,000


  • $1,392,000


  • $848,000


  • $1,272,000

2.Brush Industries reports the following information for May:

Sales

$

930,000

Fixed cost of goods sold

106,000

Variable cost of goods sold

256,000

Fixed selling and administrative costs

106,000

Variable selling and administrative costs

131,000


Calculate the operating income for May under absorption costing.

Calculate the gross margin for May under absorption costing.

Multiple Choice



  • $698,000


  • $361,000


  • $585,000


  • $586,000

3.

Red and White Company reported the following monthly data:

Units produced

2,700

units

Sales price

$

32

per unit

Direct materials

$

2

per unit

Direct labor

$

3

per unit

Variable overhead

$

4

per unit

Fixed overhead

$

8,640

in total

Part 1.What is Red and White's net income under absorption costing if 1,050 units are sold and selling and administrative expenses are $17,000?

part 2. What is Red and White's net income under variable costing if 1,050 units are sold and operating expenses are $17,000?

Homework Answers

Answer #1
Advanced company
( 40000 - 24000 ) units * product cost ( 24 + 26 + 3 ) = $ 848000
Option D is correct.
VOH cost p.u = 120000 / 40000 = $ 3
Brush industries
Sales 930000
Less:- COGS ( 106000 + 256000 ) 362000
GP 568000
Less:- Selling and adm. Exp. ( 106000 + 131000 ) 237000
NOI 331000
Red and white company
Sales ( 1050 * 32 ) 33600
Less:- Variable COGS ( 1050 * [ 2 + 3 + 4 ]) -9450
Less:- FOH ( 8640 / 2700 ) * 1050 -3360
GP 20790
Less:- Selling and adm. Exp. 17000
NOI 3790
Variable costing
Sales ( 1050 * 32 ) 33600
Less:- Variable COGS ( 1050 * [ 2 + 3 + 4 ]) -9450
Less:- operating exp. -17000
CM 7150
Less:- FC -8640
NOI -1490
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