Easton Pump Company's planned production for the year just ended was 19,300 units. This production level was achieved, and 21,900 units were sold. Other data follow: Direct material used Direct labor incurred Fixed manufacturing overhead Variable manufacturing overhead Fixed selling and administrative expenses Variable selling and administrative expenses Finished-goods inventory, January 1 $ 600,230 303,010 387,930 202,650 324,240 109,045 3,500 units The cost per unit remained the same in the current year as in the previous year. There were no work-in- process inventories at the beginning or end of the year. Required: 1. What would be Easton Pump Company's finished-goods inventory cost on December 31 under the variable-costing method? Note: Do not round intermediate calculations. 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount? Note: Do not round intermediate calculations. 1. Finished-goods inventory cost 2-a. Higher operating income method 2-b. Difference in reported income
Easton Pump Company's planned production for the year just ended was 19,300 units. This production level was achieved, and 21,900 units were sold. Other data follow: Direct material used Direct labor incurred Fixed manufacturing overhead Variable manufacturing overhead Fixed selling and administrative expenses Variable selling and administrative expenses Finished-goods inventory, January 1 $ 600,230 303,010 387,930 202,650 324,240 109,045 3,500 units The cost per unit remained the same in the current year as in the previous year. There were no work-in- process inventories at the beginning or end of the year. Required: 1. What would be Easton Pump Company's finished-goods inventory cost on December 31 under the variable-costing method? Note: Do not round intermediate calculations. 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount? Note: Do not round intermediate calculations. 1. Finished-goods inventory cost 2-a. Higher operating income method 2-b. Difference in reported income
Chapter4: Job Order Costing
Section: Chapter Questions
Problem 6PA: During the year, a company purchased raw materials of $77,321, and incurred direct labor costs of...
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
Transcribed Image Text:Easton Pump Company's planned production for the year just ended was 19,300 units. This production
level was achieved, and 21,900 units were sold. Other data follow:
Direct material used
Direct labor incurred
Fixed manufacturing overhead
Variable manufacturing overhead
Fixed selling and administrative expenses
Variable selling and administrative expenses
Finished-goods inventory, January 1
$ 600,230
303,010
387,930
202,650
324,240
109,045
3,500 units
The cost per unit remained the same in the current year as in the previous year. There were no work-in-
process inventories at the beginning or end of the year.
Required:
1. What would be Easton Pump Company's finished-goods inventory cost on December 31 under the
variable-costing method?
Note: Do not round intermediate calculations.
2-a. Which costing method, absorption or variable costing, would show a higher operating income for the
year?
2-b. By what amount?
Note: Do not round intermediate calculations.
1. Finished-goods inventory cost
2-a. Higher operating income method
2-b. Difference in reported income
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