Question 2A Last year, Colson produced 10,000 units and sold 9,000 units at a pr

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Question 2A
Last year, Colson produced 10,000 units and sold 9,000 units at a price of $9. Costs for last year were as follows:

Direct materials $10,000
Direct labor 15,000
Variable factory overhead 5,000
Fixed factory overhead 20,000
Variable selling expense 7,200
Fixed selling expense 5,000
Fixed administrative expense 12,000

Fixed factory overhead is applied based on expected production. Last year, Colson expected to produce 10,000 units.

Assuming that beginning inventory was zero, what is the value of ending inventory under absorption costing?

a $3,000

b $2,000

c $5,000

d $3,720

e $5,720



Question 2B
Last year, Colson produced 10,000 units and sold 9,000 units at a price of $9. Costs for last year were as follows:


Direct materials $10,000
Direct labor 15,000
Variable factory overhead 5,000
Fixed factory overhead 20,000
Variable selling expense 7,200
Fixed selling expense 5,000
Fixed administrative expense 12,000


Fixed factory overhead is applied based on expected production. Last year, Colson expected to produce 10,000 units.

Assuming that beginning inventory was zero, what is the value of ending inventory under variable costing?

a $3,000

b $2,000

c $5,000

d $3,720

e $5,720





Question 2C
Last year, Colson produced 10,000 units and sold 9,000 units at a price of $9. Costs for last year were as follows:

Direct materials $10,000
Direct labor 15,000
Variable factory overhead 5,000
Fixed factory overhead 20,000
Variable selling expense 7,200
Fixed selling expense 5,000
Fixed administrative expense 12,000

Fixed factory overhead is applied based on expected production. Last year, Colson expected to produce 10,000 units.

What is operating income for last year under absorption costing?

a $36,000

b $12,520

c $11,800

d $11,300

e $45,000



Question 2D
Last year, Colson produced 10,000 units and sold 9,000 units at a price of $9. Costs for last year were as follows:

Direct materials $10,000
Direct labor 15,000
Variable factory overhead 5,000
Fixed factory overhead 20,000
Variable selling expense 7,200
Fixed selling expense 5,000
Fixed administrative expense 12,000

Fixed factory overhead is applied based on expected production. Last year, Colson expected to produce 10,000 units.

What is operating income for last year under variable costing?

a $11,800

b $9,000

c $9,800

d $6,800

e $12,520

Explanation / Answer

2A. c. $5,000

2B. a. $3,000

2C. a.$36,000

2D. d.$6,800

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