1) Farron Corporation, which has only one product, has provided the following da

Question

1)     Farron Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

  Selling price

$168

  Units in beginning inventory

0

  Units produced

9,650

  Units sold

9,250

  Units in ending inventory

400

  Variable costs per unit:

    Direct materials

$32

    Direct labor

$74

    Variable manufacturing overhead

$20

    Variable selling and administrative

$24

  Fixed costs:

    Fixed manufacturing overhead

$144,750

    Fixed selling and administrative

$10,200

What is the net operating income for the month under variable costing?

$11,550

$(38,850)

$17,550

$6,000

2)     Farron Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

  Selling price

$160

  Units in beginning inventory

0

  Units produced

9,550

  Units sold

9,150

  Units in ending inventory

400

  Variable costs per unit:

    Direct materials

$30

    Direct labor

$72

    Variable manufacturing overhead

$18

    Variable selling and administrative

$22

  Fixed costs:

    Fixed manufacturing overhead

$143,250

    Fixed selling and administrative

$10,000

What is the net operating income for the month under absorption costing?

$36,550

$11,450

$17,450

$6,000

3)     Aaker Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

  Selling price

$171

  Units in beginning inventory

0

  Units produced

7,200

  Units sold

6,900

  Units in ending inventory

300

  Variable costs per unit:

    Direct materials

$30

    Direct labor

$60

    Variable manufacturing overhead

$24

    Variable selling and administrative

$24

  Fixed costs:

    Fixed manufacturing overhead

$194,400

    Fixed selling and administrative

$29,400

What is the unit product cost for the month under variable costing?

$138 per units

$165 per units

$141 per units

$114 per units

4)     Khanam Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

  Selling price

$167

  Units in beginning inventory

0

  Units produced

7,150

  Units sold

6,850

  Units in ending inventory

300

  Variable costs per unit:

    Direct materials

$29

    Direct labor

$59

    Variable manufacturing overhead

$23

    Variable selling and administrative

$23

  Fixed costs:

    Fixed manufacturing overhead

$193,050

    Fixed selling and administrative

$29,100

The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month.

What is the unit product cost for the month under absorption costing?

$138 per unit

$111 per unit

$134 per unit

$161 per unit

1)     Farron Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Explanation / Answer

Ans 1.

The net operating income for the month under variable costing for Farron Corporation is calculated below:

$11,550

Ans 2.

The net operating income for the month under absorption costing for Farron Corporation is calculated below:

$17,450

Ans 3.

the unit product cost for the month under variable costing for Aaker Corporation is calculated below:

a) Direct material $30

b) direct labor $60

c) variable manufacturing overhead $24

variable costing unit product cost (a + b+ c) $114 per unit

Ans 4. The unit product cost for the month under absorption costing for Khanam Corporation is calculated below:

a) Direct material $29

b) direct labor $59

c) variable manufacturing overhead $23

d) fixed manufacturing overhead cost (193050 / 7150 units produced ) $27

Absorbption costing unit product cost ( a + b + c+ d) = $138 per unit

i) Direct Material                                         $32 ii) Direct labor $74 iii) Variable manufacturing overhead $20 Variable costing unit product cost (i + ii + iii)   $126 A) Sales ($168 per unit * 9250 units sold)                       $1,554,000 B) Less variable expenses: Variable cost of goods sold ($126 per unit * 9250 units sold)     $1,165,500 Variable selling and administrative ($24 per unit × 9250 units) $222,000 $1,387,500 C) Contribution margin (A – B) $166,500 D) Less : fixed expenses Fixed manufacturing overhead        $144,750 Fixed selling and administrative $10,200 $154,950 E) Net operating Income ( C-D)                                        

$11,550

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