In: Accounting
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 |
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 |