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Problem #1 Last year, Airways Inc. had sales of 75,000 units and production of 100,000 units. Other information for the year included: Direct labor $ 187,000 Variable manufacturing overhead Direct materials Variable selling expenses Fixed administrative expenses Fixed manufacturing overhead 100,000 150,000 100,000 100,000 200,000 There was no beginning inventory. Required: 1. Compute the ending finished goods inventory under both absorption and variable costing. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing. Problem #2 Brother Company sells its products for $66 each. The current production level is 25,000 units. Only 20,000 units are expected to be sold. Units manufacturing costs are: Direct materials $ 12.00 Direct manufacturing labor Variable manufacturing costs Total fixed manufacturing costs Marketing expenses 18.00 9.00 180,000.00 $6.00 per unit plus $60,000 per year Required: 1. Compute the ending finished goods inventory under both absorption and variable costing. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing.

Problem #1 Last year, Airways Inc. had sales of 75,000 units and production of 100,000 units. Other information for the year included: Direct labor $ 187,000 Variable manufacturing overhead Direct materials Variable selling expenses Fixed administrative expenses Fixed manufacturing overhead 100,000 150,000 100,000 100,000 200,000 There was no beginning inventory. Required: 1. Compute the ending finished goods inventory under both absorption and variable costing. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing. Problem #2 Brother Company sells its products for $66 each. The current production level is 25,000 units. Only 20,000 units are expected to be sold. Units manufacturing costs are: Direct materials $ 12.00 Direct manufacturing labor Variable manufacturing costs Total fixed manufacturing costs Marketing expenses 18.00 9.00 180,000.00 $6.00 per unit plus $60,000 per year Required: 1. Compute the ending finished goods inventory under both absorption and variable costing. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing.

Cornerstones of Cost Management (Cornerstones Series)
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 4CE: Refer to Cornerstone Exercise 18.3. Required: 1. Calculate the cost of each unit using variable...
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Problem #1 Last year, Airways Inc. had sales of 75,000 units and production of 100,000 units. Other information for the year included: Direct labor $ 187,000 Variable manufacturing overhead 100,000 Direct materials Variable selling expenses Fixed administrative expenses Fixed manufacturing overhead 150,000 100,000 100,000 200,000 There was no beginning inventory. Required: 1. Compute the ending finished goods inventory under both absorption and variable costing. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing. Problem #2 Brother Company sells its products for $66 each. The current production level is 25,000 units. Only 20,000 units are expected to be sold. Units manufacturing costs are: Direct materials $ 12.00 Direct manufacturing labor Variable manufacturing costs Total fixed manufacturing costs Marketing expenses 18.00 9.00 180,000.00 $6.00 per unit plus $60,000 per year Required: 1. Compute the ending finished goods inventory under both absorption and variable co sting. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing.
Transcribed Image Text:Problem #1 Last year, Airways Inc. had sales of 75,000 units and production of 100,000 units. Other information for the year included: Direct labor $ 187,000 Variable manufacturing overhead 100,000 Direct materials Variable selling expenses Fixed administrative expenses Fixed manufacturing overhead 150,000 100,000 100,000 200,000 There was no beginning inventory. Required: 1. Compute the ending finished goods inventory under both absorption and variable costing. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing. Problem #2 Brother Company sells its products for $66 each. The current production level is 25,000 units. Only 20,000 units are expected to be sold. Units manufacturing costs are: Direct materials $ 12.00 Direct manufacturing labor Variable manufacturing costs Total fixed manufacturing costs Marketing expenses 18.00 9.00 180,000.00 $6.00 per unit plus $60,000 per year Required: 1. Compute the ending finished goods inventory under both absorption and variable co sting. 2. Compute the cost of goods sold under both absorption and variable costing. 3. Prepare the income statement for both absorption and variable costing.
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