Problems 1. During the most recent year, Pilkey Ltd had the following date associated with the pro it makes: Units in beginning inventory Units produced 10,000 units 8,000 units Units sold ($300 per unit) Variable costs per unit: Direct materials $50 Direct labour $100 Variable overhead $50 Fixed costs: $25 Fixed manufacturing overhead per unit produced Fixed selling and administrative $100,000 Required: 1. Calculate the unit product cost using both absorption and variable costing. 2. Prepare an income statement using absorption costing. 3. Prepare an income statement using variable costing.

Problems 1. During the most recent year, Pilkey Ltd had the following date associated with the pro it makes: Units in beginning inventory Units produced 10,000 units 8,000 units Units sold ($300 per unit) Variable costs per unit: Direct materials $50 Direct labour $100 Variable overhead $50 Fixed costs: $25 Fixed manufacturing overhead per unit produced Fixed selling and administrative $100,000 Required: 1. Calculate the unit product cost using both absorption and variable costing. 2. Prepare an income statement using absorption costing. 3. Prepare an income statement using variable costing.

Name: Problems1. During the most recent year, Pilkey Ltd had the following
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Description: Problems1. During the most recent year, Pilkey Ltd had the following date associated with the productit makes:Units in beginning inventoryUnits produced10,000 units8,000 unitsUnits sold ($300 per unit)Variable costs per unit:Direct materials$50Direc

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Problems
1. During the most recent year, Pilkey Ltd had the following date associated with the product
it makes:
Units in beginning inventory
Units produced
10,000 units
8,000 units
Units sold ($300 per unit)
Variable costs per unit:
Direct materials
$50
Direct labour
$100
Variable overhead
$50
Fixed costs:
$25
Fixed manufacturing overhead per unit produced
Fixed selling and administrative
$100,000
Required:
1. Calculate the unit product cost using both absorption and variable costing.
2. Prepare an income statement using absorption costing.
3. Prepare an income statement using variable costing.

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