Noodle-Nutrition began manufacturing beef noodle soup in May of 2011. The noodle

Question

Noodle-Nutrition began manufacturing beef noodle soup in May of 2011. The noodles sell for $1.10 for a large package of noodle soup mix. Total variable production costs are $0.65 per package. NoodleNutrition incurs monthly fixed manufacturing overhead costs of $20,400 and fixed selling and administrative cost of $13,000. On May 31, 2011 ending inventory was 7,000 soup packages. The May ending inventory has the same cost per soup package as the June packages produced. Assume NoodleNutrition produced 170,000 soup packages in June. NoodleNutrition sold 175,000 of the soup packages in June. The variable cost per unit is $0.65.

Requirements

1. Prepare the June income statement using variable costing.

2. Calculate the June ending inventory using variable costing.

Explanation / Answer

1. June income statement using variable costing.

2. June ending inventory using variable costing.

Particulars Calculation Amount Revenue from sale 175000*1.10    192,500 variable cost 175000*0.65    113,750 Contribution margin      78,750 fixed manufacturing overhead      20,400 fixed selling and administrative cost      13,000 Net profit or loss      45,350

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