A company has the following information taken from its Normal Costing records for the currentyear:Under Variable CostingP 85,000P 16,250P 10,000Total Variable CostsEnding InventoryNet IncomeUnder Absorption CostingTotal Cost of SaleEnding InventoryTotal Operating ExpensesP 84,000P 21,250P 30,000Other information:Total Units Produced20,000Total Units Sold20,000Beginning Inventory5,000There are no changes in the company's cost structure. Assume that the units produced werealso the budgeted units used in the determination of the predetermined fixed overhead rate.Required:1. How much is the company's total sales?2. How much is the cost of the company's beginning inventory under absorption costing?3. How much is the net income under absorption costing?

Absorption costing, often known as "full costing," is a managerial accounting technique for…

There are no changes in the company's cost structure. Assume that the units produced were also the budgeted units used in the determination of the predetermined fixed overhead rate. Required: 1. How much is the company's total sales? 2. How much is the cost of the company's beginning inventory under absorption costing? 3. How much is the net income under absorption costing?

There are no changes in the company's cost structure. Assume that the units produced were also the budgeted units used in the determination of the predetermined fixed overhead rate. Required: 1. How much is the company's total sales? 2. How much is the cost of the company's beginning inventory under absorption costing? 3. How much is the net income under absorption 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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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

100%

A company has the following information taken from its Normal Costing records for the current
year:
Under Variable Costing
P 85,000
P 16,250
P 10,000
Total Variable Costs
Ending Inventory
Net Income
Under Absorption Costing
Total Cost of Sale
Ending Inventory
Total Operating Expenses
P 84,000
P 21,250
P 30,000
Other information:
Total Units Produced
20,000
Total Units Sold
20,000
Beginning Inventory
5,000
There are no changes in the company's cost structure. Assume that the units produced were
also the budgeted units used in the determination of the predetermined fixed overhead rate.
Required:
1. How much is the company's total sales?
2. How much is the cost of the company's beginning inventory under absorption costing?
3. How much is the net income under absorption costing?

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