Question 1 Pak alco sells Aluminum sheets @$210 per square meter. The following data is available for the company. Units in beginning inventory . . . . . . . . . . . . . . . . . . . . 0 Units produced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Units sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000 Units in ending inventory . . . . . . . . . . . . . . . . . . . . . . . 1,000 Variable costs per unit: Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50 Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 Variable manufacturing overhead . . . . . . . . . . . . . . . 20 Variable selling and administrative . . . . . . . . . . . . . . 10 Total variable cost per unit. . . . . . . . . . . . . . . . . . . . . .$160 Fixed costs: Fixed manufacturing overhead . . . . . . . . . . . . . . . . . 700,000 Fixed selling and administrative . . . . . . . . . . . . . . . . 285,000 Total Fixed Cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $985800 Required: a) Reconcile the absorption costing and the variable costing Net operating figures and per unit cost b) Explain the reason for the difference in the answers calculated above from the two different approaches numerically & theoretically.
Question 1
Pak alco sells Aluminum sheets @$210 per square meter. The following data is available for the company.
Units in beginning inventory . . . . . . . . . . . . . . . . . . . . 0
Units produced . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000
Units sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Units in ending inventory . . . . . . . . . . . . . . . . . . . . . . . 1,000
Variable costs per unit:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Variable manufacturing
Variable selling and administrative . . . . . . . . . . . . . . 10
Total variable cost per unit. . . . . . . . . . . . . . . . . . . . . .$160
Fixed costs:
Fixed manufacturing overhead . . . . . . . . . . . . . . . . . 700,000
Fixed selling and administrative . . . . . . . . . . . . . . . . 285,000
Total Fixed Cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $985800
Required:
a) Reconcile the absorption costing and the variable costing Net operating figures and per unit cost
b) Explain the reason for the difference in the answers calculated above from the two different approaches numerically & theoretically.
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