# Text Exercises Chapter 12-13 Acc 561

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Text Exercises

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

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

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

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