Q # 9 Inventory costs – absorption vs direct costing: The following information is available for Keller Corporation’s new product line: Sales price per unit Rs. 15 Variable manufacturing cost per unit of production 8 Total annual fixed manufacturing cost 25,000 Variable administrative cost per unit of production 3 Total annual fixed marketing and administrative expenses 15,000 There are no inventory at the beginning of the year. Normal capacity is 12,500 units. During the year 12,500 units were produced and 10,000 units were sold. Required Ending inventory, assuming the use of direct costing. Ending inventory, assuming the use of absorption costing. Total variable cost charged to expense for the year, assuming the use of direct costing. Total fixed cost charged to expenses for the year, assuming the use of absorption costing
Q # 9 Inventory costs – absorption vs direct costing: The following information is available for Keller Corporation’s new product line: Sales price per unit Rs. 15 Variable manufacturing cost per unit of production 8 Total annual fixed manufacturing cost 25,000 Variable administrative cost per unit of production 3 Total annual fixed marketing and administrative expenses 15,000 There are no inventory at the beginning of the year. Normal capacity is 12,500 units. During the year 12,500 units were produced and 10,000 units were sold. Required Ending inventory, assuming the use of direct costing. Ending inventory, assuming the use of absorption costing. Total variable cost charged to expense for the year, assuming the use of direct costing. Total fixed cost charged to expenses for the year, assuming the use of absorption costing
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Q # 9
Inventory costs – absorption vs direct costing: The following information is available for Keller Corporation’s new product line:
|
Sales price per unit |
Rs. 15 |
|
Variable |
8 |
|
Total annual fixed manufacturing cost |
25,000 |
|
Variable administrative cost per unit of production |
3 |
|
Total annual fixed marketing and administrative expenses |
15,000 |
There are no inventory at the beginning of the year. Normal capacity is 12,500 units. During the year 12,500 units were produced and 10,000 units were sold.
Required
- Ending inventory, assuming the use of direct costing.
- Ending inventory, assuming the use of absorption costing.
- Total variable cost charged to expense for the year, assuming the use of direct costing.
Total fixed cost charged to expenses for the year, assuming the use of absorption costing
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