Absorption and Variable Costing with Over- and Underapplied OverheadFlaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows:Manufacturing costs (per unit):Direct materials (3 lbs. @ 1.45)$4.35Direct labor (0,4 hr. @ 14.50)5.80Variable overhead (0.4 hr. @ 5.00)2.00Fixed overhead (0.4 hr. @ 7.00)2.80Total$14 95Selling and administrative costs:Variable$1.70 per unitFixed$218.500During the year, the company had the following activity:Units produced26,000Units sold23,400Unit selling price535Direct labor hours worked10.400Actual fixed overhead was $12,400 less than budgeted fixed overhead. Budgeted variable overhead was $5,900 less than the actual variable overhead. The company used an expected actual activity level of10,400 direct labor hours to compute the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold.Required:1. Compute the unit cost using (a) absorption costing and (b) variable costing.2. Prepare an absorption-costing income statement. Round your answers to the nearest cent. 1. Compute the unit cost using (a) absorption costing and (b) variable costing.Unit CostAbsorption costing15.15 XVariable costingFeedbackCheck My WorkThe unit cost under absorption costing includes one more cost than under variable costing.The unit cost under variable costing includes one less cost than under absorption costing.2. Prepare an absorption-costing income statement. Round your answers to the nearest cent.Flaherty, Inc.Absorption-Costing Income StatementFor the First Year of OperationsLess:Gross profitOperating incomeFaathark Absorption and Variable Costing with Over- and Underapplied OverheadFlaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows:Manufacturing costs (per unit):Direct materials (3 Ibs. @ 1.45)$4.35Direct labor (0.4 hr. @ 14.50)5.80Variable overhead (0.4 hr. @ 5.00)2.00Fixed overhead (0.4 hr. @ 7.00)2.80Total$14.95Selling and administrative costs:Variable$1.70 per unitFixed$218,500During the year, the company had the following activity:Units produced26,000Units sold23,400Unit selling price$35Direct labor hours worked10,400Actual fixed overhead was $12,400 less than budgeted fixed overhead. Budgeted variable overhead was $5,900 less than the actual variable overhead. The company used an expected actual activity level of10,400 direct labor hours to compute the predetermined overhead rates. Any overhead variances are dlosed to Cost of Goods Sold.Required:1. Compute the unit cost using (a) absorption costing and (b) variable costing.Unit Cost15.15 XAbsorption costingVariable costingNextPrevious

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Absorption and Variable Costing with Over- and Underapplied Overhead Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows: Manufacturing costs (per unit): Direct materials (3 lbs. @ 1.45) $4.35 Direct labor (0,4 hr. @ 14.50) 5.80 Variable overhead (0.4 hr. @ 5.00) 2.00 Fixed overhead (0.4 hr. @ 7.00) 2.80 Total $14 95 Selling and administrative costs: Variable $1.70 per unit Fixed $218.500 During the year, the company had the following activity: Units produced 26,000 Units sold 23,400 Unit selling price 535 Direct labor hours worked 10.400 Actual fixed overhead was $12,400 less than budgeted fixed overhead. Budgeted variable overhead was $5,900 less than the actual variable overhead. The company used an expected actual activity level of 10,400 direct labor hours to compute the predetermined overhead rates. Any overhead variances are closed to Cost of Goods Sold. Required: 1. Compute the unit cost using (a) absorption costing and (b) variable costing. 2. Prepare an absorption-costing income statement. Round your answers to the nearest cent.

1. Compute the unit cost using (a) absorption costing and (b) variable costing.
Unit Cost
Absorption costing
15.15 X
Variable costing
Feedback
Check My Work
The unit cost under absorption costing includes one more cost than under variable costing.
The unit cost under variable costing includes one less cost than under absorption costing.
2. Prepare an absorption-costing income statement. Round your answers to the nearest cent.
Flaherty, Inc.
Absorption-Costing Income Statement
For the First Year of Operations
Less:
Gross profit
Operating income
Faathark

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