Calculate the number and the dollar value of easels in ending finished goods inventory. 2. Prepare a cost of goods sold statement. 3. Prepare an absorption-costing income statement.
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.
Prime Cost, Conversion Cost, Preparation of Income Statement: Manufacturing Firm
Kildeer Company makes easels for artists. During the last calendar year, a total of 34,000 easels were made, and 35,000 were sold for $60 each. The actual unit cost is as follows:
| Direct materials | $14.00 |
| Direct labor | 6.00 |
| Variable overhead | 10.00 |
| Fixed overhead | 15.00 |
| Total unit cost | $45.00 |
The selling expenses consisted of a commission of $1.00 per unit sold and advertising co-payments totaling $94,000. Administrative expenses, all fixed, equaled $179,000. There were no beginning and ending work-in-process inventories. Beginning finished goods inventory was $135,000 for 3,000 easels.
Required:
1. Calculate the number and the dollar value of easels in ending finished goods inventory.
2. Prepare a cost of goods sold statement.
3. Prepare an absorption-costing income statement. In addition to dollar amounts, enter the amounts as a percent, rounded to two decimal places. For example, .5235 would be 52.35% and you would enter 52.35 as your answer.
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