In 20x6, Supra Ltd.’s net income computed using the variable costing method was $16633, and its...

In 20x6, Supra Ltd.’s net income computed using the variable costing method was $16633, and its net income computed using the absorption costing method was $24129. The company’s unit product cost was $7.19 under variable costing and $13.43 under absorption costing. The beginning inventory consisted of 3057 units.

What was the company’s ending inventory in units?

Select one:

a. 3057 units

b. 4258 units

c. 1856 units

d. 26572 units

Expert Solution

Working Notes:
	Calculation of Fixed overhead per unit
	Product Costing as per Absorption Costing	$ 13.43
	Less: Product Costing as per Variable Costing	$ 7.19
	Difference is Fixed Overhead cost per unit	$ 6.24

Solution:
	Ending inventory = (Difference in Profit in both Method + Difference due to Beginning Balance ) / Fixed Overhead cost per unit

	Profit As per Absorption Costing	$ 24,129
	Less: Profit as per Variable Costing	$ 16,633
	Difference in Net income	$ 7,496
	Add: Difference in Beginning inventory (3057 Units X $ 6.24)	$ 19,076
		$ 26,572
	Divide By	"/" By
	Fixed Overhead Cost per unit	$ 6.24
	Ending inventory in Units	4258	Units

	Answer = Option 2 = 4258 Units

ekkarill92 answered 2 years ago

In 20x6, Supra Ltd.’s net income computed using the variable costing method was $17166, and its...

In 20x6, Supra Ltd.’s net income computed using the variable costing method was $17166, and its net income computed using the absorption costing method was $22208. The company’s unit product cost was $6.94 under variable costing and $13.27 under absorption costing. The beginning inventory consisted of 3471 units. What was the company’s ending inventory in units? Select one: a. 3471 units b. 4268 units c. 27013 units d. 2674 units Moody Manufacturing Inc. reported $66389 of operating income for the...

2.When does absorption costing net operating income and variable costing net operating income require reconciliation? Explain...

2.When does absorption costing net operating income and variable costing net operating income require reconciliation? Explain different situations with appropriate reasons behind such changes.

1.Southlawn Inc.'s taxable income is computed as follows: Book income before tax $ 2,405,600 Net permanent...

1.Southlawn Inc.'s taxable income is computed as follows: Book income before tax $ 2,405,600 Net permanent differences (512,000 ) Net temporary differences (189,000 ) Taxable income $ 1,704,600 Using a 34% rate, compute Southlawn's tax expense per books and tax payable. a.Tax expense per books $643,824; tax payable $579,564. b.Tax expense per books $579,564; tax payable $643,824. c.Tax expense per books $817,904; tax payable $579,564. d.None of the choices are correct. 2.Monro Inc. uses the accrual method of accounting. Here...

Net Present Value Method, An index computed by dividing the total present value of the net...

Net Present Value Method, An index computed by dividing the total present value of the net cash flow to be received from a proposed capital investment by the amount to be invested.Present Value Index, and Analysis for a service company Continental Railroad Company is evaluating three capital investment proposals by using the net present value method. Relevant data related to the proposals are summarized as follows: Maintenance Equipment Ramp Facilities Computer Network Amount to be invested $679,831 $436,634 $209,605 Annual...

Xiangling Company’s income under absorption costing was P42,600 higher than its income under variable costing. The...

Xiangling Company’s income under absorption costing was P42,600 higher than its income under variable costing. The company sold 15,000 units during the year, and its variable costs were P18 per unit, P4 of which represents the variable selling expense. The ending inventory is 11,600 units. Fixed selling and administrative expense is P35,000. If production cost was P20 per unit under absorption costing, then 1. How much is the fixed factory overhead per unit? 2. What is the beginning inventory units?...

Which of the following would not be an adjustment to net income using the indirect method?...

Which of the following would not be an adjustment to net income using the indirect method? Depreciation Expense An increase in Prepaid Insurance Amortization Expense An increase in Land

Using the Exhibit below (Adjustments to Net Income (Loss) Using the Indirect Method, assume that the...

Using the Exhibit below (Adjustments to Net Income (Loss) Using the Indirect Method, assume that the amount of Net Income on the Income Statement for the year was $101,800. When preparing the Statement of Cash Flow using the indirect method for the current year, which of the following statements would describe the proper presentation of net income on the Cash flow from operating activities section? EXHIBIT Increase (Decrease) Net Income (loss) $XXX Adjustments to reconcile net income to net cash flow ...

Problem 5-41 (Algorithmic) Absorption Costing vs. Variable Costing: Benefits and Calculation of Net Operating Income Safety...

Problem 5-41 (Algorithmic) Absorption Costing vs. Variable Costing: Benefits and Calculation of Net Operating Income Safety Shoes, Inc. produces a variety of products for the manufacturing industry. Hiking-style steel toe boots are among its most popular products. The company's controller spoke to the company's president at a meeting last week and told her that the company was doing well, but that the financial picture depended on how product costs and net operating income were calculated. The president did not realize...

Which of the following situations would cause variable costing net income to be higher than absorption...

Which of the following situations would cause variable costing net income to be higher than absorption costing net income? Units produced and sold were equal, units produced exceeded units sold, units sold exceeded units produced, or units sold were less than units produced

Net income computed on the basis of financial reporting often differs from taxable income due to...

Net income computed on the basis of financial reporting often differs from taxable income due to permanent differences. 1. What are permanent difference between the two? 2. How do they arise?

Question