Moskowitz Corporation has provided the following data for its two most recent ye

Question

Moskowitz Corporation has provided the following data for its two most recent years of operation: Selling price per unit $ 91 13 Manufacturing costs: Variable manufacturing cost per unit produced: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead per year Selling and administrative expenses: Variable selling and administrative expense per unit sold Fixed selling and administrative expense per year $480,000 $ 6 $ 84,000 Units in beginning inventory Units produced during the year Units sold during the year Units in ending inventory Year 1 Year 2 O 3,000 12,000 10,000 9,000 10,000 3,000 3,000 Which of the following statements is true for Year 2? O The amount of fixed manufacturing overhead released from inventories is $686,000 The amount of fixed manufacturing overhead released from inventories is $24,000 The amount of fixed manufacturing overhead deferred in inventories is $686,000 O The amount of fixed manufacturing overhead deferred in inventories is $24,000

Explanation / Answer

Answer is D.

Year 1:

Fixed Manufacturing Overhead = $480,000
Number of units produced = 12,000
Number of units in Ending Inventory = 3,000

Fixed Manufactured Overhead per unit produced = Fixed Manufacturing Overhead / Number of units produced
Fixed Manufactured Overhead per unit produced = $480,000 / 12,000
Fixed Manufactured Overhead per unit produced = $40

Fixed Manufacturing Overhead deferred in inventories = Fixed Manufactured Overhead per unit produced * Number of units in Ending Inventory
Fixed Manufacturing Overhead deferred in inventories = $40 * 3,000
Fixed Manufacturing Overhead deferred in inventories = $120,000

Year 2:

Fixed Manufacturing Overhead = $480,000
Number of units produced = 10,000
Number of units in Beginning Inventory = 3,000
Number of units in Ending Inventory = 3,000

Fixed Manufacturing Overhead released from inventories = $120,000

Fixed Manufactured Overhead per unit produced = Fixed Manufacturing Overhead / Number of units produced
Fixed Manufactured Overhead per unit produced = $480,000 / 10,000
Fixed Manufactured Overhead per unit produced = $48

Fixed Manufacturing Overhead deferred in inventories = Fixed Manufactured Overhead per unit produced * Number of units in Ending Inventory
Fixed Manufacturing Overhead deferred in inventories = $48 * 3,000
Fixed Manufacturing Overhead deferred in inventories = $144,000

Net Fixed Manufacturing Overhead deferred in inventories = Fixed Manufacturing Overhead deferred in inventories - Fixed Manufacturing Overhead released from inventories
Net Fixed Manufacturing Overhead deferred in inventories = $144,000 - $120,000
Net Fixed Manufacturing Overhead deferred in inventories = $24,000

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.