PROBLEM 4-Betty, Inc., incurs the following costs to produce and sell a single product.Variable costs per unit:Direct materialsDirect laborVariable manufacturing overheadVariable selling and administrative expensesFixed costs per year:Fixed manufacturing overheadFixed selling and administrative expensesP10P5P2P4P90,000P300,000During the last year, 30,000 units were produced and 25,000 units were sold. The FinishedGoods inventory account at the end of the year shows a balance of P85,000 for the 5,000unsold units.Required:1. Is the company using absorption costing or variable costing to cost units in the FinishedGoods inventory account? Show computations to support your answer.2.Assume that the company wishes to prepare financial statements for the year to issue toits stockholders.a. Is the P85,000 figure for Finished Goods inventory the correct amount to use on thesestatements for external reporting purposes? Explain.b. At what dollar amount should the 5,000 units be carried in inventory for externalreporting purposes?

The variable costing income statement is used for internal reporting purposes. The absorption…

PROBLEM 4- Betty, Inc., incurs the following costs to produce and sell a single product. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses P10 P5 P2 P4 P90,000 P300,000 During the last year, 30,000 units were produced and 25,000 units were sold. The Finished Goods inventory account at the end of the year shows a balance of P85,000 for the 5,000

PROBLEM 4- Betty, Inc., incurs the following costs to produce and sell a single product. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses P10 P5 P2 P4 P90,000 P300,000 During the last year, 30,000 units were produced and 25,000 units were sold. The Finished Goods inventory account at the end of the year shows a balance of P85,000 for the 5,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Revenue and cost details for a company’s single product are as follows:BWP per unit BWP per unitSales priceVariable costFixed costProfit15827(23)4Fixed costs are absorbed based on the company’s normal activity, which is also the company’s budgeted sales value for each period. Last period there were no changes in inventory and the company achieved a margin of safety of 20% of the actual sales volume. Fixed costs were over-absorbed by P2,400.Required: a. Calculate the breakeven point in units for each period.
Revenue and cost details for a company’s single product are as follows:BWP per unit BWP per unitSales priceVariable costFixed costProfit15827(23)4Fixed costs are absorbed based on the company’s normal activity, which is also the company’s budgeted sales value for each period. Last period there were no changes in inventory and the company achieved a margin of safety of 20% of the actual sales volume. Fixed costs were over-absorbed by P2,400.Required: a. Calculate the breakeven point in units for each period. b. Calculate the number of units to be produced and sold to achieve a profit of P6,600 for the period
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Foggs Corporation has provided the following data for its two most recent years of operation: Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable selling and administrative expense per unit sold Fixed selling and administrative expense per year Year 2 1,000 Year 1 Units in beginning inventory 0 $21.00 $67.00 $ 10 $6 $5 $ 520,000 $6 $ 63,000 Units produced during the year 10,000 13,000 Units sold during the year 9,000 11,000 Units in ending inventory 1,000 3,000 The unit product cost under absorption costing in Year 2 is closest to: Multiple Choice $40.00
Assume the following information for a company that produced 10,000 units and sold 9,000 units during its first year of operations: Selling price Direct materials Direct labor Variable manufacturing overhead Sales commission Fixed manufacturing overhead Per Unit Per Year $ 200 $ 73 $ 50 $ 11 $ 8 $ 300,000 Using variable costing, what is the cost of the company's ending inventory?
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During its first year of operations, the McCormick Company incurred the following manufacturing costs: Direct materials Direct labor Variable overhead Fixed overhead The company produced 21,000 units, and sold 15,500 units, leaving 5,500 units in inventory at year-end. What is the value of ending inventory under variable costing? Multiple Choice $66,000 $115,500 $49,500 $5 $ 3 per unit per unit per unit $ 4 $ 189,000 per year $189,000
15. Orion Company sells several products. Information of average revenue and costs is as follows: Selling price per unit $23 Variable cost per unit: Direct material $4.00 Direct manufacturing labor $1.60 Variable manufacturing Overhead $0.40 Sales commission $2.10 Annual fixed costs $100,000 The company sells 12,000 units at the end of the year. The contribution per unit is? a. $16.50 b. $14.90 c. $18.60 d. $19.00
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