Question

Question 4

A company had income of $55,500 using variable costing for a given period. Beginning and ending inventories for that period were 81,100 units and 91,100 units, respectively. If the fixed overhead application rate were $10.11 per unit, what would operating income have been using full costing?

Multiple Choice

• ($55,500).

• $172,200.

• $156,600.

• $0.

• Cannot be determined from the information given.

During October, Rover Industries produced 35,600 units of product with costs as follows:

Direct materials	$	87,000
Direct labor		44,500
Variable overhead		16,000
Fixed overhead		153,000
	$	300,500

What is Rover's unit cost for October, calculated on the variable costing basis?

Multiple Choice

• $3.39.

• $3.89.

• $4.14.

• $4.60.

• $5.10.

Answer 1

Answer 1
	Computation of operating income
	Income using variable cost =	55,500
add	Fixed manufacturing overhead
	=(91100-81100)*10.11	101100
	Net income=		156,600
	answer =			$156,600
Answer 2	Computation of unit cost under variable costing
	Direct materials	$	87,000
	Direct labor		44,500
	Variable overhead	16,000
	Total cost		147,500
	Total unit =		35,600
	Unit cost=		$     4.14
	answer =		$     4.14