Question

Hayes Inc. provided the following information for the current year: Beginning inventory 300 units Units produced...

Hayes Inc. provided the following information for the current year:

Beginning inventory 300 units
Units produced 950 units
Units sold 994 units
Selling price $ 350 /unit
Direct materials $ 55 /unit
Direct labor $ 36 /unit
Variable manufacturing overhead $ 35 /unit
Fixed manufacturing overhead $ 49,400 /year
Variable selling/administrative costs $ 28 /unit
Fixed selling/administrative costs $ 35,500 /year


What is the unit product cost for the year using variable costing?

Multiple Choice

  • $178

  • $126

  • $154

  • $228

  • $228

    During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials, $7 per unit, Direct labor, $5 per unit, Variable overhead, $6 per unit, and Fixed overhead, $279,000. The company produced 31,000 units, and sold 20,500 units, leaving 10,500 units in inventory at year-end. What is the value of ending inventory under absorption costing?

    Multiple Choice

  • $189,000

  • $283,500

  • $94,500

  • $279,000

  • $468,000

Homework Answers

Answer #1

Answer- The unit product cost for the year using Variable costing = $126 per unit.

Explanation-Unit product cost under Variable costing= Direct materials + Direct Labor+ Variable manufacturing overhead

= $55 per unit +$36 per unit +$35 per unit

= $126 per unit

Answer- The value of ending inventory under absorption costing is = $283500.

Explanation- Value of ending inventory under absorption costing= Ending inventory units* Unit product cost under Absorption costing

= $27 per unit*10500 units

= $283500

Where- Unit product cost under absorption costing = Direct materials + Direct Labor+ Variable Manufacturing overhead + Fixed Manufacturing overhead

= $7 per unit +$5 per unit +$6 per unit+ ($279000/31000 units)

= $27 per unit

           

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