Question

In: Accounting

In its first year of business, Ollie’s Olive Oil produced 104,000 quarts of olive oil. During...

In its first year of business, Ollie’s Olive Oil produced 104,000 quarts of olive oil. During its first year, the company sold 100,000 quarts of olive oil. Costs incurred during the year were as follows:

Ingredients used $228,800
Direct labor 104,000
Variable overhead 197,600
Fixed overhead 98,800
Variable selling expenses 50,000
Fixed selling and administrative expenses 20,000
Total actual costs $699,200

a.
1. What was the actual production cost per quart under variable costing?
2. What was the actual production cost per quart under absorption costing?
b. What was variable cost of goods sold for the year under variable costing?
c. What was cost of goods sold for the year under absorption costing?
d.
1. What was the value of ending inventory under variable costing?
2. What was the value of ending inventory under absorption costing?
e.
1. How much fixed overhead was charged to expense for the year under variable costing?
2. How much fixed overhead was charged to expense for the year under absorption costing?

Solutions

Expert Solution

a1. Actual Production cost per quart under variable costing

Particulars $
Ingredients used 228,800
Direct Labor 104,000
Variable Overhead 197,600
Actual Production Cost 530,400

a1. Actual Production cost per quart under absorption costing

Particulars $
Ingredients used 228,800
Direct Labor 104,000
Variable Overhead 197,600
Fixed Overhead 98,800
Actual Production Cost 629,200

b. Variable cost of goods sold under variable costing

Unit Product cost = $530,400 / 104,000 units = $5.10 per unit

Cost of goods sold = 100,000 units * $5.10 per unit = $510,000

c. Cost of goods sold under absorption costing

Unit Product cost = $629,200 / 104,000 units = $6.05 per unit

Cost of goods sold = 100,000 units * $6.05 per unit = $605,000

d1. Value of ending inventory under variable costing

Ending inventory = 104,000 - 100,000 = 4,000 units

Unit Product cost = $530,400 / 104,000 units = $5.10 per unit

Value of ending inventory = 4,000 units * $5.10 per unit = $20,400

d2. Value of ending inventory under absorption costing

Ending inventory = 104,000 - 100,000 = 4,000 units

Unit Product cost = $629,200 / 104,000 units = $6.05 per unit

Value of ending inventory = 4,000 units * $6.05 per unit = $24,200

e1. Fixed overhead charged under variable costing

Fixed overhead charged = $98,800

e2. Fixed overhead charged under absorption costing

Fixed overhead per unit = $98,800 / 104,000 units = $0.95 per unit

Fixed overhead charged = 100,000 * $0.95 per unit = $95,000

All the best...


Related Solutions

A house costs $ 1,725 to heat with its existing oil-burning boiler during the first year...
A house costs $ 1,725 to heat with its existing oil-burning boiler during the first year and this cost is expected to increase by $ 25 in each subsequent year. For an investment of $ 3,000, a natural gas furnace can be installed, and the winter heating bill is estimated to be $ 1,000 and expected to increase $ 15 each year. If the homeowner's MARR is 7% per year, what is the discounted payback period of this proposed investment...
The following events occurred at Jack Company during its first year of business: a. To establish...
The following events occurred at Jack Company during its first year of business: a. To establish the company, the two owners contributed a total of $60,000 in exchange for common stock. b. Grooming service revenue for the first year amounted to $175,000, of which $50,000 was on account. c. Customers owe $15,000 at the end of the year from the services provided on account. d. At the beginning of the year, a storage building was rented. The company was required...
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units. During 2022, XYZ Company produced 30,000 units and sold 32,000 units. The following information was taken from XYZ's accounting records for 2021 and 2022: 2021 2022 Direct materials cost per unit ............ $18 $17 Direct labor cost per unit ................ $16 $21 Variable overhead cost per unit ........... $7 $9 Variable selling & admin cost per unit .... $4 $6 Fixed overhead (total cost)...
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units. During 2022, XYZ Company produced 30,000 units and sold 32,000 units. The following information was taken from XYZ's accounting records for 2021 and 2022: 2021 2022 Direct materials cost per unit ............ $18 $17 Direct labor cost per unit ................ $16 $21 Variable overhead cost per unit ........... $7 $9 Variable selling & admin cost per unit .... $4 $6 Fixed overhead (total cost)...
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units. During 2022, XYZ Company produced 30,000 units and sold 32,000 units. The following information was taken from XYZ's accounting records for 2021 and 2022: 2021 2022 Direct materials cost per unit ............ $18 $17 Direct labor cost per unit ................ $16 $21 Variable overhead cost per unit ........... $7 $9 Variable selling & admin cost per unit .... $4 $6 Fixed overhead (total cost)...
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units....
During 2021, its first year of operations, XYZ Company produced 25,000 units and sold 19,000 units. During 2022, XYZ Company produced 30,000 units and sold 32,000 units. The following information was taken from XYZ's accounting records for 2021 and 2022: 2021 2022 Direct materials cost per unit ............ $18 $17 Direct labor cost per unit ................ $16 $21 Variable overhead cost per unit ........... $7 $9 Variable selling & admin cost per unit .... $4 $6 Fixed overhead (total cost)...
COST-VOLUME ANALYSIS During its first year of operations, the S-Ray Corporation produced the following income statement...
COST-VOLUME ANALYSIS During its first year of operations, the S-Ray Corporation produced the following income statement results: Income Statement 2013 Net Sales 400,000.00 less: Cost of Goods Sold 240,000.00 Gross Profit 160,000.00 less: General & Administrative 60,000.00 less: Marketing expenses 60,000.00 less: Depreciation 20,000.00 EBIT 20,000.00 less: Interest expenses 10,000.00 Earnings before taxes 10,000.00 less: Income taxes (30%) 3,000.00 Net earnings (loss)               7,000.00 Costs of goods sold are expected to vary with sales and be a constant percentage of sales....
Trez Company began operations this year. During this first year, the company produced 100,000 units and...
Trez Company began operations this year. During this first year, the company produced 100,000 units and sold 80,000 units. The absorption costing income statement for this year follows. Sales (80,000 units × $40 per unit) $ 3,200,000 Cost of goods sold Beginning inventory $ 0 Cost of goods manufactured (100,000 units × $20 per unit) 2,000,000 Cost of good available for sale 2,000,000 Ending inventory (20,000 × $20) 400,000 Cost of goods sold 1,600,000 Gross margin 1,600,000 Selling and administrative...
The following costs were incurred for the single product produced during the first year of operations...
The following costs were incurred for the single product produced during the first year of operations for the Fairfax Manufacturing Company: Variable costs per unit: Manufacturing: Direct materials $      11 Direct labor $       5 Variable manufacturing overhead $       2 Variable selling and administrative $       2 Fixed costs per year: Fixed manufacturing overhead $ 350,000 Fixed selling and administrative $ 260,000 During the year, the company produced 35,000 units and sold 25,000 units. The selling price of the company’s product is $46 per unit. Required:   ...
Stock Issuance Utep Enterprises had the following transactions during 2017, its first year of business. Required:...
Stock Issuance Utep Enterprises had the following transactions during 2017, its first year of business. Required: 1. Identify and analyze the effect of each transaction. a. Issued 5,400 shares of $5 par common stock for cash at $15 per share. Activity Accounts Statement(s) How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT