Question

1.

Bryans Corporation has provided the following data for its two most recent years of operation:

Selling price per unit	$	53
Manufacturing costs:
Variable manufacturing cost per unit produced:
Direct materials	$	13
Direct labor	$	6
Variable manufacturing overhead	$	5
Fixed manufacturing overhead per year	$	63,000
Selling and administrative expenses:
Variable selling and administrative expense per unit sold	$	4
Fixed selling and administrative expense per year	$	71,000

	Year 1		Year 2
Units in beginning inventory	0		3,000
Units produced	9,000		7,000
Units sold	6,000		7,000
Units in ending inventory	3,000		3,0000

The unit product cost under variable costing in Year 1 is closest to:

Multiple Choice

$35.00

$24.00

$31.00

$28.00

2.

Danahy Corporation manufactures a single product. The following data pertain to the company's operations over the last two years:

Variable costing net operating income, last year	$	52,000
Variable costing net operating income, this year	$	68,000
Fixed manufacturing overhead costs released from inventory under absorption costing, last year	$	4,000
Fixed manufacturing overhead costs deferred in inventory under absorption costing, this year	$	6,000

What was the absorption costing net operating income this year?

Multiple Choice

$62,000

$74,000

$70,000

$66,000

Answer 1

	Answer = 1)
	Caclulation of Unit Cost of Production by using Variable Costing
	Particulars	Amount
		Cost per Unit
	Direct Materials	$                13.00
	Direct Labour	$                  6.00
	Variable Manufacturing Cost	$                  5.00
	Total Manufacturing Variable Cost	$                24.00
	Answer = Option 2 = $ 24
	Answer =2)
	Net Operating Income as per variable costing - This year =	$             68,000
	Add:
	Fixed manufacturing overhead costs released from inventory under absorption costing, last year	$                4,000
	Less:
	Fixed manufacturing overhead costs deferred in inventory under absorption costing, this year	$                6,000
	Total income as per absorption costing	$             66,000
	Answer = Option D = $ 66,000