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?

 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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