A Company produced 80,900 units during its first year of operations and sold 77,100 at 21.60 per unit. The company chose practical activity-at 80,900 units to compute its predetermined overhead rate. Manufacturing costs are as follows: Direct materials 457,085 87,372 Direct labor Expected and actual variable overhead 300,139 Expected and actual fixed overhead 432,006 Calculate the unit cost and the cost of finished goods inventory under absorption costing and calculate the unit cost and the cost of finished goods inventory under variable costing.
A Company produced 80,900 units during its first year of operations and sold 77,100 at 21.60 per unit. The company chose practical activity-at 80,900 units to compute its predetermined overhead rate. Manufacturing costs are as follows: Direct materials 457,085 87,372 Direct labor Expected and actual variable overhead 300,139 Expected and actual fixed overhead 432,006 Calculate the unit cost and the cost of finished goods inventory under absorption costing and calculate the unit cost and the cost of finished goods inventory under variable costing.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 15E: Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal costing...
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:A Company produced 80,900 units during its first year of operations and sold 77,100 at
21.60 per unit. The company chose practical activity-at 80,900 units to compute its
predetermined overhead rate. Manufacturing costs are as follows:
Direct materials
Direct labor
Expected and actual variable overhead
Expected and actual fixed overhead
457,085
87,372
300,139
432,006
Calculate the unit cost and the cost of finished goods inventory under absorption costing
and calculate the unit cost and the cost of finished goods inventory under variable
costing.
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