Production cost; absorption vs. variable costing In its first year of business, Ollie’s Olive Oil produced 187,200 quarts of olive oil. During its first year, the company sold 180,000 quarts of olive oil. Costs incurred during the year were as follows: Ingredients used $411,840 Direct labor 187,200 Variable overhead 355,680 Fixed overhead 177,840 Variable selling expenses 90,000 Fixed selling and administrative expenses 36,000 Total actual costs $1,258,5
Production cost; absorption vs. variable costing
In its first year of business, Ollie’s Olive Oil produced 187,200 quarts of olive oil. During its first year, the company sold 180,000 quarts of olive oil. Costs incurred during the year were as follows:
| Ingredients used | $411,840 |
| Direct labor | 187,200 |
| Variable |
355,680 |
| Fixed overhead | 177,840 |
| Variable selling expenses | 90,000 |
| Fixed selling and administrative expenses | 36,000 |
| Total actual costs | $1,258,560 |
a.
1. What was the actual production cost per quart under variable costing? $Answer
2. What was the actual production cost per quart under absorption costing? $Answer
b. What was variable cost of goods sold for the year under variable costing? $Answer
c. What was cost of goods sold for the year under absorption costing? $Answer
d.
1. What was the value of ending inventory under variable costing? $Answer
2. What was the value of ending inventory under absorption costing? $Answer
e.
1. How much fixed overhead was charged to expense for the year under variable costing? $Answer
2. How much fixed overhead was charged to expense for the year under absorption costing? $Answer
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