13. Carter reported $152,000 of income for the year by using variable costing. T
ID: 2514002 • Letter: 1
Question
13.
Carter reported $152,000 of income for the year by using variable costing. The company had no beginning inventory, planned and actual production of 50,000 units, and sales of 48,000 units. Standard variable manufacturing costs were $15 per unit, and total budgeted fixed manufacturing overhead was $110,000. If there were no variances, income under absorption costing would be:
Multiple Choice
$93,400.
$138,400.
$147,400.
$156,400.
$201,400.
12. Moneka reported $60,000 of income for the year by using absorption costing. The company had no beginning inventory, planned and actual production of 20,000 units, and sales of 18,000 units. Standard variable manufacturing costs were $22 per unit, and total budgeted fixed manufacturing overhead was $90,000. If there were no variances, income under variable costing would be:
Multiple Choice
$51,000.
$111,000.
$60,000.
$11,000.
71,000
Explanation / Answer
13 For Carter: Units Produced 50000 Units Sold 48000 Closing Units 2000 Fixed MOH 110000 Units Produced 50000 Fixed MOH PU 2.20 Under Variable Costing, Total Fixed Manufactures OH Cost 110000 has been charged But Under Absorption Costing, Fixed Manufactures OH Cost relating to only the Unit Sold should have been charged to Income Statement The difference is the Absorption of Unsold Units(2000) @ 2.20 Excess FMOH Charged to Income in Variable Costing 4400 Income in Variable Costing 152000 Add: Excess Charged FMOH 4400 Income in Absorption Costing 156400 14 For Moneka: Units Produced 20000 Units Sold 18000 Closing Units 2000 Fixed MOH 90000 Units Produced 20000 Fixed MOH PU 4.50 Under Aborption Costing, Only Fixed Manufactures OH Cost relating to Units sold has been charged to Income i.e (18000*4.50)= 81000 But Under Variable Costing, Total Fixed Manufactures OH Cost should have been charged to Income Statement The difference is the Under Application of FMOH of Unsold Units(2000) @ 4.50 Excess FMOH Charged to Income in Variable Costing 9000 Income in Absorption Costing 60000 Less: Under Charged FMOH 9000 Income in Variable Costing 51000
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