Question

In: Accounting

During its second year of operations, TGS Corporation produced 3,410 units and sold 2,690 units at...

During its second year of operations, TGS Corporation produced 3,410 units and sold 2,690 units at $55 each. The beginning inventory comprised 105 units, and costs were unchanged from the previous year. Costs incurred during the second year were as follows:

Direct materials per unit produced $7
Direct labour per unit produced 10
Variable overhead per unit produced 12
Variable selling and administrative costs per unit sold 2
Total fixed production overhead 23,870
Total fixed selling and administrative costs 5,930

Reconcile TGS’s income based on absorption costing and variable costing.

Value of ending inventory under variable costing
Fixed manufacturing costs deferred in ending inventory
Value of ending inventory under absorption costing

eTextbook and Media

Reconcile TGS’s income based on variable costing and throughput costing.

Value of ending inventory under variable costing
Conversion costs deferred in ending inventory
Value of ending inventory under throughput costing

Solutions

Expert Solution

Part-1
Value of Ending Inventory as per Variable Costing
( 825 UnitX $29)
$23,925.00
Fixed Manufacturing Cost deferred in Ending Inventory
(825X7)
$5,775.00
Value of Ending Inventory as per Absorption Costing
( 825 UnitX $36)
$29,700.00
Part-2
Value of Ending Inventory as per Variable Costing
( 825 UnitX $29)
$23,925.00
Conversion Cost Cost deferred in Ending Inventory
(825X22)
$18,150.00
Value of Ending Inventory as per Super Variable Costing
( 825 UnitX $7)
$5,775.00

working Note:-

Computation of Unit in Ending Inventory
Beg Inventor+ Produced- Sold
105+ 3410-2690=825 Unit
Computation of Unit cost as per Absorption Costing
Varianle cost per Unit ( 7+10+12) $29.00
Fixed Production Overhead per Unit
(23870/3410)
$7.00
Total Unit cost $36.00
Computation of Unit cost as per Variable Costing
Varianle cost per Unit ( 7+10+12) $29.00
tal Unit cost $29.00
Computation of Unit cost as per Super Variable Costing
Jan
Material Cost $7.00
$7.00
Conversion Cost
Labour Cost per Unit : $10 $22.00
Variable Production Overhead Per Unit : 12

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