Question
In: Accounting
Year 1 Year 2 Beginning FG inventory in units 100 ? Ø Units Produced 3,000 1,000...
|
Year 1 |
Year 2 |
|
|
Beginning FG inventory in units |
100 |
? Ø |
|
Units Produced |
3,000 |
1,000 |
|
Units Sold |
2,000 |
2,000 |
|
Sales |
$800,000 |
$800,000 |
|
Material Costs |
$210,000 |
$70,000 |
|
Variable Labor |
$66,000 |
$66,000 |
|
Variable Overhead |
$24,000 |
$8,000 |
|
Fixed Overhead |
$240,000 |
$240,000 |
|
Variable Selling & Administration |
$60,000 |
$60,000 |
|
Fixed Selling and Administrative Expense |
$120,000 |
$120,000 |
*Beginning Inventory costs per unit for Year 0 are identical to those for Year 1.
Ø The amount of beginning inventory for Year 2 is missing. Please determine how many units are in beginning inventory.
Determine the income using both absorption and variable/throughput costing.
Present the data to managers so that they understand any income fluctuations
Solutions
Expert Solution
| varialbe costing | |||||||||
| year 1 | year 2 | ||||||||
| particulars | value | qty | per unit | particulars | value | qty | per unit | ||
| sales | $8,00,000.00 | 2000 | $400.00 | sales | $8,00,000.00 | 2000 | $400.00 | ||
| material | $2,10,000.00 | 2000 | $105.00 | material | $70,000.00 | 2000 | $35.00 | ||
| labour | $66,000.00 | 2000 | $33.00 | labour | $66,000.00 | 2000 | $33.00 | ||
| varable overheda | $24,000.00 | 2000 | $12.00 | varable overheda | $8,000.00 | 2000 | $4.00 | ||
| varlable sellliing | $60,000.00 | 2000 | $30.00 | varlable sellliing | $60,000.00 | 2000 | $30.00 | ||
| Total varialbe cost | $3,60,000.00 | Total varialbe cost | $2,04,000.00 | ||||||
| contribution | $4,40,000.00 | contribution | $5,96,000.00 | ||||||
| fixed selling | $1,20,000.00 | 2000 | $60.00 | fixed selling | $1,20,000.00 | 2000 | $60.00 | ||
| fixed ovehread | $2,40,000.00 | 2000 | $120.00 | fixed ovehread | $2,40,000.00 | 2000 | $120.00 | ||
| Total fixed costs | $3,60,000.00 | Total fixed costs | $3,60,000.00 | ||||||
| net profit | $80,000.00 | net profit | $2,36,000.00 | ||||||
| ABSORPTION COSTING | |||||||||
| particulars | value | qty | per unit | particulars | value | qty | per unit | ||
| sales | $8,00,000.00 | 2000 | $400.00 | sales | $8,00,000.00 | 2000 | |||
| material | $2,10,000.00 | 3000 | $70.00 | material | $70,000.00 | 1000 | $70.00 | ||
| labour | $66,000.00 | 3000 | $22.00 | labour | $66,000.00 | 1000 | $66.00 | ||
| varable overheda | $24,000.00 | 3000 | $8.00 | varable overheda | $8,000.00 | 1000 | $8.00 | ||
| fixed ovehread | $2,40,000.00 | 3000 | $80.00 | fixed ovehread | $2,40,000.00 | 1000 | $240.00 | ||
| Total overhead | $5,40,000.00 | 3000 | $180.00 | Total overhead | $3,84,000.00 | 1000 | $384.00 | ||
| cost of good sold | $3,60,000.00 | 2000 | 180 | cost of good sold | $1,98,000.00 | $1,100.00 | $180.00 | ||
| $3,45,600.00 | $900.00 | $384.00 | |||||||
| gross profit | $4,40,000.00 | total | $5,43,600.00 | ||||||
| gross profit | $2,56,400.00 | ||||||||
| varlable sellliing | $60,000.00 | ||||||||
| fixed selling | $1,20,000.00 | varlable sellliing | $60,000.00 | ||||||
| total cost of sales | $1,80,000.00 | fixed selling | $1,20,000.00 | ||||||
| total cost of sales | $1,80,000.00 | ||||||||
| net proflit | $2,60,000.00 | ||||||||
| net proflit | $76,400.00 | ||||||||
| year 1 | year2 | ||||||||
| op stock | 100 | 1100 | |||||||
| produced | 3000 | note : it is assumed that out of 2000 units sold | |||||||
| sales | -2000 | 1100 units are from op stoct @180 | |||||||
| cl stock | 1100 | and remainng 900 units are from current year @384 | |||||||
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