6. Direct and absorption costing <?xml:namespace prefix = o ns = \"urn:schemas-m
ID: 2364369 • Letter: 6
Question
6. Direct and absorption costing <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /?>
The information that follows pertains to Consumer Products for the year ended December 31, 19X6.
Inventory, 1/1/X6
24,000 units
Units manufactured
80,000
Units sold
82,000
Inventory, 12/31/X6
? units
Manufacturing costs:
Direct materials
$3 per unit
Direct labor
$5 per unit
Variable factory overhead
$9 per unit
Fixed factory overhead
$280,000
Selling & administrative expenses:
Variable
$2 per unit
Fixed
$136,000
The unit selling price is $26. Assume that costs have been stable in recent years.
Instructions:
a. Compute the number of units in the ending inventory.
24,000 + 80,000
Inventory, 1/1/X6
24,000 units
Units manufactured
80,000
Units sold
82,000
Inventory, 12/31/X6
? units
Manufacturing costs:
Direct materials
$3 per unit
Direct labor
$5 per unit
Variable factory overhead
$9 per unit
Fixed factory overhead
$280,000
Selling & administrative expenses:
Variable
$2 per unit
Fixed
$136,000
Explanation / Answer
High-low method The following cost data pertain to 19X6 operations of Heritage Products: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Shipping costs $58,200 $58,620 $60,125 $59,400 Orders shipped 120 140 175 150 http://www.slideshare.net/kgkjkhdiy70909/acc-206-week-3-chapter-5-problem-6
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