Easton Pump Company's planned production for the year just ended was 20,000 units. This production level was achieved, and 21,000 units were sold. Other data follow: Direct material used Direct labor incurred. Fixed manufacturing overhead Variable manufacturing overhead Fixed selling and administrative expenses Variable selling and administrative expenses Finished-goods inventory, January 1 $600,000 300,000 420,000 200,000 350,000 105,000 2,000 units The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. 1. Finished-goods inventory cost 2-a. Higher operating income method 2-b. Difference in reported income Required: 1. What would be Easton Pump Company's finished-goods inventory cost on December 31 under the variable-costing method? (Do not round intermediate calculations.) 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount? (Do not round intermediate calculations.)
Easton Pump Company's planned production for the year just ended was 20,000 units. This production level was achieved, and 21,000 units were sold. Other data follow: Direct material used Direct labor incurred. Fixed manufacturing overhead Variable manufacturing overhead Fixed selling and administrative expenses Variable selling and administrative expenses Finished-goods inventory, January 1 $600,000 300,000 420,000 200,000 350,000 105,000 2,000 units The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. 1. Finished-goods inventory cost 2-a. Higher operating income method 2-b. Difference in reported income Required: 1. What would be Easton Pump Company's finished-goods inventory cost on December 31 under the variable-costing method? (Do not round intermediate calculations.) 2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year? 2-b. By what amount? (Do not round intermediate calculations.)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 16E: Kildeer Company makes easels for artists. During the last calendar year, a total of 30,000 easels...
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:Easton Pump Company's planned production for the year just ended was 20,000 units. This production level was achieved, and
21,000 units were sold. Other data follow:
Direct material used
Direct labor incurred.
Fixed manufacturing overhead
Variable manufacturing overhead
Fixed selling and administrative expenses
Variable selling and administrative expenses
Finished-goods inventory, January 1
$600,000
300,000
420,000
200,000
350,000
105,000
2,000 units
The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the
beginning or end of the year.
1. Finished-goods inventory cost
2-a. Higher operating income method
2-b. Difference in reported income
Required:
1. What would be Easton Pump Company's finished-goods inventory cost on December 31 under the variable-costing method? (Do not
round intermediate calculations.)
2-a. Which costing method, absorption or variable costing, would show a higher operating income for the year?
2-b. By what amount? (Do not round intermediate calculations.)
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