(Variable and absorption costing) Porta Light manufactures a high quality LED lashlight for home/office use. Data pertaining to the company's operations are as follows: Production for the year 45,000 units Sales for the year (sales price per unit, $8) 48,750 units Beginning 2013 inventory 8,750 units Costs to produce one unit (2012 & 2013): Direct material $3.60 Direct labor 1.00 Variable overhead 0.60 Fixed overhead 0.40 Selling and administrative costs: Variable (per unit sold) $0.40 Fixed (per year) $150,000 The FOH rate is based on units of production based on an expected production capacity of 100,000 units per year. a. What is budgeted annual fixed manufacturing overhead? b. If budgeted fixed overhead equals actual fixed overhead, what is underapplied or overapplied fixed overhead in 2013 under absorption costing? Under variable costing? c. What is the product cost per unit under absorption costing? Under variable costing?
(Variable and absorption costing) Porta Light manufactures a high quality LED lashlight for home/office use. Data pertaining to the company's operations are as follows: Production for the year 45,000 units Sales for the year (sales price per unit, $8) 48,750 units Beginning 2013 inventory 8,750 units Costs to produce one unit (2012 & 2013): Direct material $3.60 Direct labor 1.00 Variable overhead 0.60 Fixed overhead 0.40 Selling and administrative costs: Variable (per unit sold) $0.40 Fixed (per year) $150,000 The FOH rate is based on units of production based on an expected production capacity of 100,000 units per year. a. What is budgeted annual fixed manufacturing overhead? b. If budgeted fixed overhead equals actual fixed overhead, what is underapplied or overapplied fixed overhead in 2013 under absorption costing? Under variable costing? c. What is the product cost per unit under absorption costing? Under variable costing?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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LO.6 & LO.7 (Variable and absorption costing) Porta Light manufactures a high quality LED lashlight for home/office use. Data pertaining to the company's operations are as follows:
|
Production for the year |
45,000 units |
| Sales for the year (sales price per unit, $8) | 48,750 units |
| Beginning 2013 inventory | 8,750 units |
| Costs to produce one unit (2012 & 2013): | |
| Direct material | $3.60 |
| Direct labor | 1.00 |
| Variable |
0.60 |
| Fixed overhead | 0.40 |
| Selling and administrative costs: | |
| Variable (per unit sold) | $0.40 |
| Fixed (per year) | $150,000 |
The FOH rate is based on units of production based on an expected production capacity of 100,000 units per year.
a. What is budgeted annual fixed manufacturing overhead?
b. If budgeted fixed overhead equals actual fixed overhead, what is underapplied or overapplied fixed overhead in 2013 under absorption costing? Under variable costing?
c. What is the product cost per unit under absorption costing? Under variable costing?
d. How much total expense is charged against revenues in 2013 under absorption costing? Under variable costing?
c. Is income higher under absorption or variable costing? By what amount?
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