please show your work so I can learn how to do it! thank you . In its first oper

ID: 2532620 • Letter: P

Question

please show your work so I can learn how to do it! thank you

. In its first operating quarter a company has incurred the following Raw maerials purchase Direst labo Vanable factory Fixed selling and Cross margin Ending inventories WiP FG NONE How much fix costing? ed overhead cost is included in ending finished goods inventory under absorption A $34,000 B $21,500 C $800 D. $18,000 E. None of the Above 2?The following information pertains to a calculator manufacturer. Units produced in a month 200,000 $7.80 $1.65 0.95 Direct materia unit Direct labor per unit $4 25 Total Fixed overhead $300,000 Variable overbead per unit Total Fixed S&A; 125,500 Variable S&A; per unit What is the unit product cost under absorption costing and variable costing respectively? A. $15.20 and $13.70 B. S16.10 and $13.50 C. $14.65 and 515.00 D. $15.80 and $14.65 E. None of the above

Explanation / Answer

Problem 1

Absorption Costing System

- Product Cost refers to the costs used to fabricate/make/produce a product.

- Under Absorption Costing, product cost includes both fixed and variable manufacturing expenses incurred in fabrication of the product or service.

- It includes cost of direct material used, cost of direct labor, consumable supplies used and manufacturing/factory overheads (both variable as well as fixed factory overhead).

- Ending Inventory is valued on Production Cost.

- Product Cost does not include Selling, General and Administrative Expenses.

From the given problem we need to find out first Cost of Goods Sold by using following formula:

Cost of Goods Sold = Sales – Gross Margin = 1,000,000 – 304,000 = $696,000

Total Units Sold = 8,000 Units

Total Unit Cost = Cost of Goods Sold / Sold Units

= 696,000 / 8,000 Units

= $87 Per Unit

Value of Ending Finished Goods Inventory = 2,000 Units x Per Cost $87 = $174,000

Calculation of Fixed Factory Overhead

Raw Materials Used into production (Purchases 210,000 - Ending 30,000)

180000

Direct labor

$355,000

Variable Factory Overhead

$165,000

Fixed Factory Overhead (bal. fig)

$170,000

(870,000 – 180,000 – 355,000 – 165,000)

Total Manufacturing Cost

$870,000

(696,000 + 174,000)

Less: Ending Finished Goods Inventory

($174,000)

Cost of Goods Sold (as calculated above)

$696,000

Total Produced Units = Sold Units 8,000 + Finished Goods Ending Units 2,000 = 10,000 Units

Fixed Factory Overhead = $170,000

Per Unit Fixed Factory Overhead = $170,000 / Produced Units 10,000 Units = $17 per unit

Fixed Factory Overhead portion in Ending Finished Goods Inventory = 2,000 Units x $17 = $34,000

The correct option is A. $34,000

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Pls ask separate question for remaining parts