Exercise 7 6& 7 9
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EXERCISE 7-6
Compute the unit product cost for one computer desk, using absorption costing.
Direct material
$ 50
Direct labor
$ 80
Variable MOH
$ 20
Total vc. MOH cost
$150
Fix.MOH(700,000/20000)
$ 35
Unit product cost
$ 185
income statement for year RM sales (19,000 x $ 210)
RM 3990,000
cost of goods sold : beginning inventory
0
add cost of goods manufacturing (20,000 x $185)
3700,000
goods available for sale
3700,000
(-) ending inventory (1000 x $ 185)
(185,000)
Cost of goods sold
3515,000
Gross margin
475,000
Selling & administrative exp.(19,000 x $10 + 285,000)
475,000
Net operating income
EXERCISE 7-9
0
Unit product cost using variable costing Direct material
$5
Direct labor
$6
Variable MOH
$1
Unit product cost
$ 12
Income statement for year RM Sales (35,000 x $25)
RM 875,000
Variable exp: Variable COGS: Beginning inventory
0
Add variable MOH cost (40,000 x $12)
480,000
Goods available for sale
480,000
(-) ending inventory (5000 x $12)
60,000
Variable COGS
420,000
Variable selling & administrative (35,000 x $2)
70,000
Contribution margin
490,000 385,000
Fixed exp: Fixed MOH
160,000
Fixed selling&administrative
210,000
Net operating income
370,000 15,000
The reconciliation of the variable and absorption costing net operating income follows :
Variable costing net operating income
$ 15,000
Add fixed MOH cost deferred in inventory under absorption Costing (5000 x $ 4)
$ 20,000
Absorption costing net operating income
$ 35,000
Compute the unit product cost for one computer desk, using absorption costing.
Direct material
$ 50
Direct labor
$ 80
Variable MOH
$ 20
Total vc. MOH cost
$150
Fix.MOH(700,000/20000)
$ 35
Unit product cost
$ 185
income statement for year RM sales (19,000 x $ 210)
RM 3990,000
cost of goods sold : beginning inventory
0
add cost of goods manufacturing (20,000 x $185)
3700,000
goods available for sale
3700,000
(-) ending inventory (1000 x $ 185)
(185,000)
Cost of goods sold
3515,000
Gross margin
475,000
Selling & administrative exp.(19,000 x $10 + 285,000)
475,000
Net operating income
EXERCISE 7-9
0
Unit product cost using variable costing Direct material
$5
Direct labor
$6
Variable MOH
$1
Unit product cost
$ 12
Income statement for year RM Sales (35,000 x $25)
RM 875,000
Variable exp: Variable COGS: Beginning inventory
0
Add variable MOH cost (40,000 x $12)
480,000
Goods available for sale
480,000
(-) ending inventory (5000 x $12)
60,000
Variable COGS
420,000
Variable selling & administrative (35,000 x $2)
70,000
Contribution margin
490,000 385,000
Fixed exp: Fixed MOH
160,000
Fixed selling&administrative
210,000
Net operating income
370,000 15,000
The reconciliation of the variable and absorption costing net operating income follows :
Variable costing net operating income
$ 15,000
Add fixed MOH cost deferred in inventory under absorption Costing (5000 x $ 4)
$ 20,000
Absorption costing net operating income
$ 35,000
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