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Business Accounting Financial & Managerial Accounting: Information for Decisions w Access Card, 5th edition, ACC 211 & 212, Northern Virginia Community College

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: Increase or decrease in gross margin under absorption costing if production doubles to 40,000 units and sales remain 20,000 units. 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 × $26 per unit ) (520,000) Gross profit 680,000 Table (1) Working note: Calculation of total cost of production, Total cost of production = ( Direct material + Direct labor + Variable overhead + Fixed overhead ) = $ 10 + $ 12 + $ 3 + $ 1 = $ 27 Calculation of fixed overhead per unit, Fixed Overhead per unit= Fixed overhead per year Normal production level = $ 40 , 000 40 , 000 = $ 1 per unit So, gross margin on the basis of absorption costing is $680,000 when production doubles to 40,000 units.

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: Increase or decrease in gross margin under absorption costing if production doubles to 40,000 units and sales remain 20,000 units. 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 × $26 per unit ) (520,000) Gross profit 680,000 Table (1) Working note: Calculation of total cost of production, Total cost of production = ( Direct material + Direct labor + Variable overhead + Fixed overhead ) = $ 10 + $ 12 + $ 3 + $ 1 = $ 27 Calculation of fixed overhead per unit, Fixed Overhead per unit= Fixed overhead per year Normal production level = $ 40 , 000 40 , 000 = $ 1 per unit So, gross margin on the basis of absorption costing is $680,000 when production doubles to 40,000 units.

Financial & Managerial Accounting: Information for Decisions w Access Card, 5th edition, ACC 211 & 212, Northern Virginia Community College

Financial & Managerial Accounting: Information for Decisions w Access Card, 5th edition, ACC 211 & 212, Northern Virginia Community College

5th Edition

ISBN: 9781259347641

Author: Ken W. Shaw, Barbara Chiappetta John J. Wild

Publisher: McGraw Hill Education

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Chapter 19, Problem 5QS

Chapter 19, Problem 7QS

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What is the amount of overhead allocated to job 8-45 ?? General accounting

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Chapter 19 Solutions

Financial & Managerial Accounting: Information for Decisions w Access Card, 5th edition, ACC 211 & 212, Northern Virginia Community College

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

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