units inc medS00m var ble r ?nufacturing costs and $15 units o s 50 ea n A e yea
ID: 2399221 • Letter: U
Question
units inc medS00m var ble r ?nufacturing costs and $15 units o s 50 ea n A e year using absorption cos rig ?nd vanable cosing In xed manufacturing costs Haddan also 1ncurre S7 000 in Selling and Administrative Costs all xed. Calculate the lotal product cost per unit Calculate the operating incorne for the year using absorption costing. Absorption operating income for th 2. Haddan Company has 150 units in ? n shed Coods Inventory a the beginning o the accounting penod. Du ng the BCCounting pe od Hadde n pro uced 250 units and Sold 40 Operalina Incoe Calculate the operating income tor the year using vanable casting Variable costing cosing Operating Choose from any list or enter any number in the input fields and then continue to the next question.Explanation / Answer
Product cost under absorption Costing = 60 + 15 = $75
Product cost under Variable cosing = 60
Operating income under absorption Costing can be calculated as follows:
Sales = 100x250 = 25000
Less: Cost of goods sold
Opening stock = 150x75 = 11250
Add: Production = 250x75 = 18750
Less: Closing stock = 300x75 = (22500)
Cost of goods sold = 7500
Gross profit = 25000 - 7500 = $17500
Less: Selling and administration costs = $7000
Operating Income = 17500 - 7000 = $10,500
Operating income under Variable Costing can be calculated as follows:
Sales = 100x250 = 25000
Less: Cost of goods sold
Opening stock = 150x60 = 9000
Add: Production = 250x60 = 15000
Less: Closing stock = 300x60 = (18000)
Cost of goods sold = 6000
Gross profit = 25000 - 6000 = $19000
Less: Fixed manufacturing cost = 250 x15 = 3750
Less: Selling and administration costs = $7000
Operating Income = 19000 - 3750 - 7000 = $8,250
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