Answered: 1. How many units are in ending…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 25E: Last year, Orsen Company produced 25,000 juicers and sold 26,500 juicers for 60 each. The actual...

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The following information pertains to Vladamir, Inc., for last year:

Beginning inventory, units		1,500
Units produced		100,000
Units sold		101,000
Variable costs per unit:
Direct materials		$8.00
Direct labor		$10.00
Variable overhead		$1.00
Variable selling expenses		$2.00
Fixed costs per year:
Fixed overhead		$200,000
Fixed selling and administrative expenses		$240,000

There are no work-in-process inventories. Normal activity is 100,000 units. Expected and actual overhead costs are the same. Costs have not changed from one year to the next.

Required:

1. How many units are in ending inventory?

2. Without preparing an income statement, indicate what the difference will be between variable-costing income and absorption-costing income.

3a. Assume the selling price per unit is $32. Prepare an income statement using variable costing.

Vladamir, Inc.Variable-Costing Income StatementFor Last Year

	$- Select -
Less:
	- Select -
	- Select -
Contribution margin
Less:
	- Select -
	- Select -
Operating income

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3b. Assume the selling price per unit is $32. Prepare an income statement using absorption costing.

Vladamir, Inc.Absorption-Costing Income StatementFor Last Year

	$- Select -
	- Select -
Gross profit
	- Select -
Operating income

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