Variable Costing, Value of Ending Inventory, Operating Income Pattison Products,

Question

Variable Costing, Value of Ending Inventory, Operating Income

Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month with the following unit costs:

Total fixed factory overhead is $280,000 per month. During October, 38,400 units were sold at a price of $24, and fixed marketing and administrative expenses were $130,500.

Required:

1. Calculate the cost of each unit using variable costing. Round your final answer to the nearest cent.
$ per unit

2. How many units remain in ending inventory?
units

What is the cost of ending inventory using variable costing?
$

3. Prepare a variable-costing income statement for Pattison Products, Inc., for the month of October.

Pattison Products, Inc.

Variable-Costing Income Statement

For the Month of October

  

$  

Less:

  

  

  

  

Contribution margin

$  

Less:

  

  

  

  

Operating income

$  

4. What if November production was 40,000 units, costs were stable, and sales were 41,000 units? What is the cost of ending inventory?
$

What is operating income for November?

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3. Prepare a variable-costing income statement for Pattison Products, Inc., for the month of October.

Pattison Products, Inc.

Variable-Costing Income Statement

For the Month of October

  

$  

Less:

  

  

  

  

Contribution margin

$  

Less:

  

  

  

  

Operating income

$  

Explanation / Answer

Pattison Products Details Production n October units            40,000 Sold in Oct units            38,400 Closing Stock in Oct units              1,600      1 Variable Cost Of Production Per Unit   Cost Details Unit Cost $ Direct Materials                 5.00 Direct Labor                 3.00 Variable Overhead                 1.50 Unit Bariable Cost of Production $            9.50      2 Units in closing inventory              1,600 Variable cost of ending inventory $ 15,200.00      3 Income Statement Contribution Margin Format for the period ending Oct 31. Details Amt $/Unit Total Amt $ Sales Revenue 24             921,600 Variable costs of Goods Sold $            9.50             364,800 Add Variable Marketing Cost 1.2                46,080 Total Variable cost of Sales $          10.70             410,880 Contribution Margin $          13.30 $   510,720.00 Less Fixed costs Fixed Manufacturing Overhead             280,000 Fixed Selling & Admin Costs             130,500 Total Fixed Costs             410,500 Net Operating Income             100,220      4 Nov Unit details Opening Balance              1,600 Add Production            40,000 Less Sales              41,000 Closing Stock                  600 Closing Inventory value Nov =              5,700 Income Statement Contribution Margin Format for the period ending Nov 30. Details Amt $/Unit Total Amt $ Sales Revenue 24             984,000 Variable costs of Goods Sold $            9.50             389,500 Add Variable Marketing Cost 1.2                49,200 Total Variable cost of Sales $          10.70             438,700 Contribution Margin $          13.30 $   545,300.00 Less Fixed costs Fixed Manufacturing Overhead             280,000 Fixed Selling & Admin Costs             130,500 Total Fixed Costs             410,500 Net Operating Income             134,800

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