Answered: Unit Costs, Inventory Valuation,…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter3: Cost Behavior And Cost Forecasting

Section: Chapter Questions

Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...

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Unit Costs, Inventory Valuation, Variable and Absorption Costing

Snyder Company produced 90,500 units during its first year of operations and sold 86,650 at $21.16 per unit. The company chose practical activity—at 90,500 units—to compute its predetermined overhead rate. Manufacturing costs are as follows:

Direct materials	$583,725
Direct labor	90,500
Expected and actual variable overhead	362,905
Expected and actual fixed overhead	439,830

Required:

If required, round unit cost answers to the nearest cent.

1. Calculate the unit cost and the cost of finished goods inventory under absorption costing.

Unit Cost	$fill in the blank 1
Cost of finished goods inventory	$fill in the blank 2

2. Calculate the unit cost and the cost of finished goods inventory under variable costing.

Unit Cost	$fill in the blank 3
Cost of finished goods inventory	$fill in the blank 4

3. What is the dollar amount that would be used to report the cost of finished goods inventory to external parties?
$fill in the blank 5

Why?

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