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Exercise 8-22 Absorption and Variable Costing (LO 8-1, 8-4) Easton Pump Company's planned production for the year just ended was 18,800 units. This production level was achieved, and 21,30 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 $582,800 300,800 406,080 193,640 325,240 83,660 3,400 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? (Do no 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? (Do not round intermediate calculations.) 1. 2-a 2-b. Finished-goods inventory cost Higher operating income method Difference in reported income

Exercise 8-22 Absorption and Variable Costing (LO 8-1, 8-4) Easton Pump Company's planned production for the year just ended was 18,800 units. This production level was achieved, and 21,30 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 $582,800 300,800 406,080 193,640 325,240 83,660 3,400 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? (Do no 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? (Do not round intermediate calculations.) 1. 2-a 2-b. Finished-goods inventory cost Higher operating income method Difference in reported income

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Exercise 8-22 Absorption and Variable Costing (LO 8-1, 8-4) Easton Pump Company's planned production for the year just ended was 18,800 units. This production level was achieved, and 21,30 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 $582,800 300,800 406,080 193,640 325,240 83,660 3,400 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? (Do no 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? (Do not round intermediate calculations.) 1. 2-a 2-b. Finished-goods inventory cost Higher operating income method Difference in reported income
Transcribed Image Text:Exercise 8-22 Absorption and Variable Costing (LO 8-1, 8-4) Easton Pump Company's planned production for the year just ended was 18,800 units. This production level was achieved, and 21,30 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 $582,800 300,800 406,080 193,640 325,240 83,660 3,400 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? (Do no 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? (Do not round intermediate calculations.) 1. 2-a 2-b. Finished-goods inventory cost Higher operating income method Difference in reported income
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