Skip to main content

Business Accounting FIN & MANAGERIAL ACCT VOL 2 W/CONNECT

Absorption Costing: Absorption costing states that the goods that have been produced have absorbed all the costs of manufacturing. In other words the cost related to manufacture like direct material, direct labor, variable manufacturing overhead and fixed manufacturing overhead are count under product cost. To determine: Gross margin under absorption costing. Solution: Calculation of gross margin on the basis of absorption costing, Particulars Amount ($) Sales ( 20 , 000 units × $60 per unit ) 1,200,000 Less: Cost of goods sold ( 20 , 000 unit × $27 per unit ) (540,000) Gross profit 660,000 Working note: Calculation of total cost of production, Total cost of production = ( Direct material + Direct labor + Variable overhead + Fixed overhead ) = $ 10 + $ 12 + $ 3 + $ 2 = $ 27 Calculation of fixed overhead per unit, Fixed Overhead per unit= Fixed overhead per year Normal production level = $ 40 , 000 20 , 000 = $ 2 per unit So, gross margin on the basis of absorption costing is $660,000.

Absorption Costing: Absorption costing states that the goods that have been produced have absorbed all the costs of manufacturing. In other words the cost related to manufacture like direct material, direct labor, variable manufacturing overhead and fixed manufacturing overhead are count under product cost. To determine: Gross margin under absorption costing. Solution: Calculation of gross margin on the basis of absorption costing, Particulars Amount ($) Sales ( 20 , 000 units × $60 per unit ) 1,200,000 Less: Cost of goods sold ( 20 , 000 unit × $27 per unit ) (540,000) Gross profit 660,000 Working note: Calculation of total cost of production, Total cost of production = ( Direct material + Direct labor + Variable overhead + Fixed overhead ) = $ 10 + $ 12 + $ 3 + $ 2 = $ 27 Calculation of fixed overhead per unit, Fixed Overhead per unit= Fixed overhead per year Normal production level = $ 40 , 000 20 , 000 = $ 2 per unit So, gross margin on the basis of absorption costing is $660,000.

FIN & MANAGERIAL ACCT VOL 2 W/CONNECT

FIN & MANAGERIAL ACCT VOL 2 W/CONNECT

7th Edition

ISBN: 9781308675527

Author: Wild

Publisher: MCG/CREATE

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 19, Problem 4QS

Chapter 19, Problem 6QS

Chapter 19 Solutions

FIN & MANAGERIAL ACCT VOL 2 W/CONNECT

Ch. 19 - Prob. 1MCQ Ch. 19 - Prob. 2MCQ Ch. 19 - Prob. 3MCQ Ch. 19 - Prob. 4MCQ Ch. 19 - Prob. 5MCQ Ch. 19 - Prob. 1DQ Ch. 19 - Prob. 2DQ Ch. 19 - Prob. 3DQ Ch. 19 - Prob. 4DQ Ch. 19 - Prob. 5DQ

Ch. 19 - Prob. 6DQ Ch. 19 - Prob. 7DQ Ch. 19 - Prob. 8DQ Ch. 19 - Prob. 9DQ Ch. 19 - Prob. 10DQ Ch. 19 - Prob. 11DQ Ch. 19 - Prob. 12DQ Ch. 19 - Prob. 13DQ Ch. 19 - Prob. 14DQ Ch. 19 - Prob. 1QS Ch. 19 - Prob. 2QS Ch. 19 - Prob. 3QS Ch. 19 - Prob. 4QS Ch. 19 - Prob. 5QS Ch. 19 - Prob. 6QS Ch. 19 - Prob. 7QS Ch. 19 - Prob. 8QS Ch. 19 - Prob. 9QS Ch. 19 - Prob. 10QS Ch. 19 - Prob. 11QS Ch. 19 - Prob. 12QS Ch. 19 - Prob. 13QS Ch. 19 - Prob. 14QS Ch. 19 - Prob. 15QS Ch. 19 - Prob. 16QS Ch. 19 - Prob. 17QS Ch. 19 - Prob. 18QS Ch. 19 - Prob. 19QS Ch. 19 - Prob. 20QS Ch. 19 - Prob. 1E Ch. 19 - Prob. 2E Ch. 19 - Prob. 3E Ch. 19 - Prob. 4E Ch. 19 - Prob. 5E Ch. 19 - Prob. 6E Ch. 19 - Prob. 7E Ch. 19 - Prob. 8E Ch. 19 - Prob. 9E Ch. 19 - Prob. 10E Ch. 19 - Prob. 11E Ch. 19 - Prob. 12E Ch. 19 - Prob. 13E Ch. 19 - Prob. 14E Ch. 19 - Prob. 15E Ch. 19 - Prob. 16E Ch. 19 - Prob. 1PSA Ch. 19 - Prob. 2PSA Ch. 19 - Prob. 3PSA Ch. 19 - Prob. 1PSB Ch. 19 - Prob. 2PSB Ch. 19 - Prob. 3PSB Ch. 19 - Prob. 19SP Ch. 19 - BTN 19-1 Apple’s ending inventory amounts (in $...Ch. 19 - Prob. 2BTN Ch. 19 - Prob. 3BTN Ch. 19 - Prob. 4BTN Ch. 19 - Prob. 5BTN Ch. 19 - Prob. 6BTN Ch. 19 - Prob. 7BTN Ch. 19 - Prob. 8BTN Ch. 19 - Prob. 9BTN