Tundra Tack manufactures horse saddles. In 2015, fixed overhead was applied to products at the rate of $9 per unit. Variable cost per unit remained constant throughout the year. In September 2015, income under variable costing was $195,000. September's beginning and ending inventories were 18,500 and 9,700 units, respectively. a. Calculate income under absorption costing assuming no variances. b. Assume instead that the company's September beginning and ending inventories were 10,200 and 13,800 units, respectively. Calculate income under absorption costing.
Tundra Tack manufactures horse saddles. In 2015, fixed overhead was applied to products at the rate of $9 per unit. Variable cost per unit remained constant throughout the year. In September 2015, income under variable costing was $195,000. September's beginning and ending inventories were 18,500 and 9,700 units, respectively. a. Calculate income under absorption costing assuming no variances. b. Assume instead that the company's September beginning and ending inventories were 10,200 and 13,800 units, respectively. Calculate income under absorption costing.
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter10: Cost Analysis For Management Decision Making
Section: Chapter Questions
Problem 3P
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Tundra Tack manufactures horse saddles. In 2015, fixed overhead was applied to products at the rate of $9 per unit. Variable cost per unit remained constant throughout the year. In September 2015, income under variable costing was $195,000. September's beginning and ending inventories were 18,500 and 9,700 units, respectively. a. Calculate income under absorption costing assuming no variances. b. Assume instead that the company's September beginning and ending inventories were 10,200 and 13,800 units, respectively. Calculate income under absorption costing.
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