The following information relates to Dorian Industrial for fiscal 2014, the comp
ID: 2416090 • Letter: T
Question
The following information relates to Dorian Industrial for fiscal 2014, the company’s first year of operation:
Calculate the amount of fixed manufacturing overhead that will be included in ending inventory under full costing and reconcile it to the difference between income computed under variable and full costing. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Units produced 416,000 Units sold 398,600 Selling price per unit $ 49 Direct material per unit $ 16 Direct labor per unit $ 5 Variable manufacturing overhead per unit $ 1 Variable selling cost per unit $ 0.02 Annual fixed manufacturing overhead $ 832,000 Annual fixed selling expense $ 311,000 Annual fixed administrative expense $ 104,000Explanation / Answer
Calculation of amount of fixed manufacturing overhead included in the ending inventory under full costing method:
(* $8,32,000/4,16,000 units = $2.00)
Hence ,Fixed manufacturing overhead included in ending inventory= $2* 17,400 = $34,800
Difference between income computed under variable and full costing:
Net income under full costing/absorption costing = $ 95,42,028
Net income under variable costing =$ 83,11,428
Difference = $ 12 30,600
Direct materials $16 Direct labor $ 5 Variable manufacturing overhead $ 1 Fixed manufacturing overhead $2* ——– Total absorption cost per unit $24 ——– Ending inventory under full costing: $24× 17,400 = $ 4,17,600Related Questions
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