Pattison Products, Inc., began operations in October and manufactured 56,000 units during the month with the following unit costs: Direct materials $7.00 Direct labor 5.00 Variable overhead 2.50 Fixed overhead* 9.00 Variable marketing cost 2.20 * Fixed overhead per unit = $504,000 / 56,000 units produced = $9 Total fixed factory overhead is $504,000 per month. During October, 53,800 units were sold at a price of $30.50, and fixed marketing and administrative expenses were $115,100. Required: Question Content Area 1. Calculate the cost of each unit using absorption costing. Round your final answer to the nearest cent. 2. How many units remain in ending inventory? 3. What is the cost of ending inventory using absorption costing? 4. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October. Pattison Products, Inc.Absorption-Costing Income StatementFor the Month of October $- Select - - Select - Gross profit $fill in the blank cd02fbfe204efe9_5 Less: - Select - - Select - Operating income $fill in the blank cd02fbfe204efe9_10 Question Content Area 5. What if November production was 56,000 units, costs were stable, and sales were 57,000 units? What is the cost of ending inventory? 6. What is operating income for November?
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.
Pattison Products, Inc., began operations in October and manufactured 56,000 units during the month with the following unit costs:
| Direct materials | $7.00 |
| Direct labor | 5.00 |
| Variable overhead | 2.50 |
| Fixed overhead* | 9.00 |
| Variable marketing cost | 2.20 |
* Fixed overhead per unit = $504,000 / 56,000 units produced = $9
Total fixed factory overhead is $504,000 per month. During October, 53,800 units were sold at a price of $30.50, and fixed marketing and administrative expenses were $115,100.
Required:
Question Content Area
1. Calculate the cost of each unit using absorption costing. Round your final answer to the nearest cent.
2. How many units remain in ending inventory?
3. What is the cost of ending inventory using absorption costing?
4. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October.
|
|
$- Select - |
|
|
- Select - |
| Gross profit | $fill in the blank cd02fbfe204efe9_5 |
| Less: | |
|
|
- Select - |
|
|
- Select - |
| Operating income | $fill in the blank cd02fbfe204efe9_10 |
Question Content Area
5. What if November production was 56,000 units, costs were stable, and sales were 57,000 units? What is the cost of ending inventory?
6. What is operating income for November?
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