Text Exercises Chapter 12-13 Acc 561

Text Exercises

12-59 see spreadsheet

13-B3 Comparison of Variable Costing and Absorption Costing

1. What is the ending finished-goods inventory cost under absorption costing?

Direct labor $4,200

Direct materials used 3,500

Fixed manufacturing overhead 2,200

Variable manufacturing overhead 300

Total Manufacturing cost 10,200

Cost per unit=10,200/1,600=$6.38 Units produced 1600 – Units sold 1400=200Units

200 units * $6.38= $12.76

2. What is the ending finished-goods inventory cost under variable costing?

Direct labor $4,200

Direct materials used 3,500

Variable manufacturing overhead 300

Total Manufacturing cost $8,000

Cost per unit=8000/1600=$5.00 1600-1400=200 units

200*$5.00=$1,000.00

13-45 Variable and Absorption Costing

1. Determine operating income for 20X7, assuming the firm uses the variable-costing approach to product costing.

Cost Per Unit = Total Cost incurred $144,000 / Units Manufactured 15,000 = $9.60

Units Manu 15,000 – Units Sold 12,000 = 3000 Units

Ending Inventory cost = Cost per unit $9.6 x 3000 Units = $28,800

2. Assume that there is no January 1, 20X7, inventory; no variances are allocated to inventory; and the firm uses a “full absorption” approach to product costing. Compute (a) the cost assigned to December 31, 20X7, inventory; and (b) operating income for the year ended December 31, 20X7.

Cost Per Unit = Total Cost incurred $225,000 / Units Manufactured 15,000 = $15

15,000 – Units Sold 12,000 = 3000 Units

Ending Inventory cost = Cost per unit $15 x 3000 Units = $45,000

13-48 Overhead Variances

a. F Fixed=$2600 Variable=$2300

b. F Fixed=$1700 Variable=$2300

c. F Fixed=$1700 Variable=$1900

d. F Fixed=$1700 Variable=$2300

13-49 Variances

1. Spending variance F

2. Efficiency variance F

3. Production-volume variance U

4. Flexible-budget variance U

5. Under applied overhead U