Question 1During the most recent year, Jerai Company had the following data associated with theproduct it makes:Units in beginning inventory300Units producedUnits sold (RM300 per unit)15,00012,700Variable costs per unitRMDirect materials20Direct labor60Variable overhead12Fixed costsFixed overhead per unitproducedFixed selling and administrative30140,000Refer to the data above:a) How many units are in ending inventory?b) Using absorption costing and variable costing, calculate the per unit product cost.c) What is the value of ending inventory under absorption costing and variable costing?d) Calculate the cost of goods sold under absorption costing and variable costing.e) Prepare an income statement using absorption costing and variable costing.

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Question 1 During the most recent year, Jerai Company had the following data associated with the product it makes: Units in beginning inventory 300 Units produced Units sold (RM300 per unit) Variable costs per unit 15,000 12,700 RM Direct materials 20 Direct labor 60 Variable overhead 12 Fixed costs Fixed overhead per unit produced 30 Fixed selling and administrative 140,000 Refer to the data above: a) How many units are in ending inventory? b) Using absorption costing and variable costing, calculate the per unit product cost. c) What is the value of ending inventory under absorption costing and variable costing? d) Calculate the cost of goods sold under absorption costing and variable costing. e) Prepare an income statement using absorption costing and variable costing.

Question 1 During the most recent year, Jerai Company had the following data associated with the product it makes: Units in beginning inventory 300 Units produced Units sold (RM300 per unit) Variable costs per unit 15,000 12,700 RM Direct materials 20 Direct labor 60 Variable overhead 12 Fixed costs Fixed overhead per unit produced 30 Fixed selling and administrative 140,000 Refer to the data above: a) How many units are in ending inventory? b) Using absorption costing and variable costing, calculate the per unit product cost. c) What is the value of ending inventory under absorption costing and variable costing? d) Calculate the cost of goods sold under absorption costing and variable costing. e) Prepare an income statement using absorption costing and variable costing.

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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V. Prepare a CONTRIBUTION MARGIN (also known as variable costing) income statement given a traditional (also known as absorption costing) income statement Bruno Industries manufactures and sells a single product. The controller has prepared the following income statement for the most recent year: B C D 1 2 3 Bruno Industries Traditional Income Statement (Absorption Costing) For the Year Ended December 31 4 5 Sales revenue 6 Less: Cost of goods sold 7 Gross profit 8 Less: Operating expenses 9 Operating income $ 406,000 329,000 $ 77,000 73,000 $ 4,000 10 The company produced 8,000 units and sold 7,000 units during the year ending December 31. Fixed manufacturing overhead (MOH) for the year was $152,000, while fixed operating expenses were $62,000. The company had no beginning inventory. Requirements 1. Will the company's operating income under variable costing be higher, lower, or the same as its operating income under absorption costing? Why? 2. Prepare a variable costing income…
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