Question

Moody Manufacturing Inc. reported $80429 of operating income for the year by using variable costing. The...

Moody Manufacturing Inc. reported $80429 of operating income for the year by using variable costing. The following information also pertains to the current year:

Beginning inventory

0

Production

30982 units

Sales

20735 units

Variable manufacturing cost per unit

$13 per unit

Fixed manufacturing overhead

$102422

What is the operating income (loss) under absorption costing?

Select one:

a. $80429

b. $46554

c. $114304

d. $131045

During 20x5, Bey Company reported an operating income of $82554 using absorption costing and an operating income of $67722 using variable costing. 18554 units were produced during 20x5 and sales during 20x5 totaled 13569. What is he fixed overhead application rate per unit (it has been stable for the past 3 years)?

Select one:

a. $2.98

b. $14832

c. $1.09

d. $0.80

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution 1:

Units in Ending Inventory = 30,982 - 20,735 = 10,247 units

Fixed manufacturing overhead deferred in Ending Inventory under Absorption costing = $102422/30982 *10247 = $33,875

Net Operating Income Under Absorption costing = Operating income using Variable costing + Fixed manufacturing overhead deferred in Inventory under Absorption costing

= $80429 + $33875

= $114,304

Hence, option "c" is correct.

Solution 2:

Ending inventory units = 18554 - 13569 = 4,985 units

Fixed manufacturing overhead deferred in Ending Inventory = Operating Income using Absorption costing - Operating income using variable costing

= $82554- $67722 = $14,832

Fixed overhead application rate per unit = $14832/ 4985 = $2.98 per unit

Hence option "a" is correct.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Operating income determined using absorption costing can be reconciled to operating income determined using variable costing...
Operating income determined using absorption costing can be reconciled to operating income determined using variable costing by computing the difference between which of the following? Select one: a. Gross margin (absorption costing method) and contribution margin (variable costing method).cross out b. Discretionary costs included in the beginning and ending inventories.cross out c. Sales as recorded under the variable costing method and sales as recorded under the absorption costing method.cross out d. Fixed manufacturing overhead costs deferred in or released from...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ 1,240,000 $ 1,860,000 Cost of goods sold (@ $34 per unit) 680,000 1,020,000 Gross margin 560,000 840,000 Selling and administrative expenses* 311,000 341,000 Net operating income $ \249,000\ $ 499,000 * $3 per unit variable; $251,000 fixed each year. The company’s $34 unit product cost is computed as follows: Direct materials $ 7...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ 1,054,000 $ 1,674,000 Cost of goods sold (@ $43 per unit) 731,000 1,161,000 Gross margin 323,000 513,000 Selling and administrative expenses* 299,000 329,000 Net operating income $ 24,000 $ 184,000 * $3 per unit variable; $248,000 fixed each year. The company’s $43 unit product cost is computed as follows: Direct materials $ 9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,260,000 $ 1,890,000 Cost of goods sold (@ $34 per unit) 680,000 1,020,000 Gross margin 580,000 870,000 Selling and administrative expenses* 311,000 341,000 Net operating income $ \269,000\ $ 529,000 * $3 per unit variable; $251,000 fixed each year. The company’s $34 unit product cost is computed as follows: Direct materials $ 9...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,197,000 $ 1,827,000 Cost of goods sold (@ $46 per unit) 874,000 1,334,000 Gross margin 323,000 493,000 Selling and administrative expenses* 305,000 335,000 Net operating income $ \18,000\ $ 158,000 * $3 per unit variable; $248,000 fixed each year. The company’s $46 unit product cost is computed as follows: Direct materials $ 10...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per unit) $ 915,000 $ 1,525,000 Cost of goods sold (@ $37 per unit) 555,000 925,000 Gross margin 360,000 600,000 Selling and administrative expenses* 297,000 327,000 Net operating income $ \63,000\ $ 273,000 * $3 per unit variable; $252,000 fixed each year. The company’s $37 unit product cost is computed as follows: Direct materials $ 6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per unit) $ 1,098,000 $ 1,708,000 Cost of goods sold (@ $40 per unit) 720,000 1,120,000 Gross margin 378,000 588,000 Selling and administrative expenses* 307,000 337,000 Net operating income $ 71,000 $ 251,000 * $3 per unit variable; $253,000 fixed each year. The company’s $40 unit product cost is computed as follows: Direct materials $ 6...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as...
During Heaton Company’s first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $60 per unit) $ 1,080,000 $ 1,680,000 Cost of goods sold (@ $41 per unit) 738,000 1,148,000 Gross margin 342,000 532,000 Selling and administrative expenses* 307,000 337,000 Net operating income $ 35,000 $ 195,000 * $3 per unit variable; $253,000 fixed each year. The company’s $41 unit product cost is computed as follows: Direct materials $ 9...
During Heaton Company’s first two years of operations, the company reported absorption costing net operating income...
During Heaton Company’s first two years of operations, the company reported absorption costing net operating income as follows:    Year 1 Year 2   Sales (@ $63 per unit) $ 1,134,000     $ 1,764,000       Cost of goods sold (@ $37 per unit) 666,000     1,036,000       Gross margin 468,000     728,000       Selling and administrative expenses* 304,000     334,000       Net operating income $ \164,000\     $ 394,000         * $3 per unit variable; $250,000 fixed each year.    The...
Variable Costing—Production Exceeds Sales Fixed manufacturing costs are $45 per unit, and variable manufacturing costs are...
Variable Costing—Production Exceeds Sales Fixed manufacturing costs are $45 per unit, and variable manufacturing costs are $135 per unit. Production was 105,000 units, while sales were 99,750 units. a. Determine whether variable costing operating income is less than or greater than absorption costing operating income. Variable costing operating income is less than absorption costing. b. Determine the difference in variable costing and absorption costing operating income.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT