Question

# During the most recent year, ABC Corp. had the following data: Beginning inventory in units           ...

During the most recent year, ABC Corp. had the following data:

 Beginning inventory in units - Units produced 16,000 Units sold (\$125 per unit) 15,000 Variable costs per unit: Direct materials \$        10 Direct labor \$        18 Variable overhead \$          6 Fixed costs: Fixed overhead per unit produced \$        25 Fixed selling and administrative \$ 200,000

Required:

A. How many units are in ending inventory?

B. Using absorption costing, calculate the per-unit product cost. What is the value of ending inventory?

C. Using variable costing, calculate the per-unit product cost. What is the value of ending inventory?

D. Prepare an income statement using absorption costing.

E. Prepare an income statement using variable costing.

a) ending inventory unit = 16000-15000 = 1000 Units

b) Unit product cost = 10+18+6+25 = 59 per unit

Ending inventory cost = 59*1000 = 59000

c) Unit product cost = 10+18+6 = 34 per unit

Ending inventory cost = 34*1000 = 34000

d) Income statement

 Sales (15000*125) 1875000 Less: Cost of goods sold (15000*59) -885000 Gross profit 990000 Less: Selling and administrative expense -200000 Operating income 790000

e) Income statement

 Sales (15000*125) 1875000 Less: Variable Cost of goods sold (15000*34) -510000 Contribution margin 1365000 Less: Fixed cost (200000+400000) -600000 Operating income 765000

#### Earn Coins

Coins can be redeemed for fabulous gifts.