Question

Question 1

Envelope Company had the following information during the previous year for one of its product lines:

• Sales price per unit: $500
• Units in beginning inventory: 0
• Units started during the year: 37,000
• Units sold: 30,000

Variable costs per unit:

• Direct materials: $90
• Direct labor: $180
• Variable overhead costs: $50

Fixed costs:

• Fixed overhead per unit: $30
• General and administrative: $1,000,000

To Do

1. Calculate the ending inventory value and prepare an income statement using absorption costing.
2. Calculate the ending inventory value and prepare an income statement using variable costing.

Question 2

The following information is for the previous year for Star Company. Based on this information, prepare a segmented income statement.

	Product A	Product B	Common
Sales	2,000,000	3,500,000
Cost of Goods Sold	1,000,000	1,800,000
Direct Fixed Overhead	100,000	100,000
Direct General & Administrative	20,000	50,000
Common Fixed Overhead			300,000
Common G & A			50,000

Answer 1