Question

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Question refers to this data

Variable production costs         $480,000

Variable S and A costs              $55,000

Fixed S and A costs                  $100,000

Fixed production costs              $270,000

Unit sales price                         $           8

production in units                    $120,000

Sales in units                            110,000

Under full costing, the value of the ending inventory is:

A. $80,000

B. 62,500

C. $40,000

D. $210,000

Under variable costing, the cost per unit is

A. $2.25

B. $6.25

C. $4.36

D $210,000

under full costing, net income (loss) is:

A. $37,500

B. $15,000

C $(25,000)

D. none of the above

under variable costing, the contribution margin is:

A. 192,000

B. 345,000

c. 385,000

D. 400,000

Under full costing, the amount of deferred overhead is

A. $0

B. $22, 500

C $270,000

D. None of the above

Question refers to this data

Unit sales price            $20

Variable production cost per unit        $8

Variable S and A cost per unit            $2

Fixed overhead cost                           $150,000

Fixed selling and admin, cost             $200,000

Units produced                                   $50,000

Units sold                                            $48,000

Using full costing, the cost per unit is

A. $8

B. $11

C. $12

D. $9.05

Using variable costing, the cost of the ending inventory is:

A. $40,000

b. $22,000

C. $16,000

D. $24,000

Using variable costing, the contribution margin is

A. $576,000

B. 432,000

C. $336,000

d. $480,000

Using full costing, the gross margin is

A. $576,000

B. 432,000

C.336,000

D. $480,000

Total period costs under variable costing are

A. $350,000

B. $296,000

C.$446,000

D.$200,000

Answer 1

Answer:-

Value of ending inventory = Cost of unit production * No.of ending inventory units.

No.Of ending inventory units = Units produced - Units sold.

= 1,20,000 - 1,10,000

= 10,000.

Cost of production as per absorption method = Variable production cost + fixed production cost

= $ 4,80,000 + $ 2,70,000

= $ 7,50,000 for 1,20,000 units.

Now cost of ending inventory = ( $ 7,50,000)* 10,000 ÷ 1,20,000

= $ 62,500.

(2) Under variable costing , cost per unit is ?

In the given information , Variable cost of production includes direct material ,direct labour and variable overhead.

In variable costing we consider variable costs for finding cost per unit.

COST PER UNIT = VARIABLE COST OF PRODUCTION ÷ 1,10,000 units

= $ 4,80,000 ÷ 1,10,000

= $ 4.36.

(3)

S.no	particulars	Amount ($)
01	Sales	880000
02	Cost of goods sold ($ 6.25*1,10,000)	(687500)
03	Under absorption	22,500
04	Variable S& A expenses	(55000)
06	Fixed S & A expenses	(1,00,000)
07	Net profit	60,000

(4) Under variable costing, contribution margin :

Contribution = sales - variable cost

= $ 8,80,000 - ( $ 4,80,000 + $ 55,000)

= $ 3,45,000.

(5) Deferred amount of over head :-

= (Total Fixed manufacturing over head ÷ no of units produced )*ending inventory.

= ($ 2,70,000 ÷ 1,20,000)* 10,000 units.

= $ 22,500.