For 2014, Nichols, Inc., had sales of 140,000 units and production of 200,000 un
ID: 2590233 • Letter: F
Question
For 2014, Nichols, Inc., had sales of 140,000 units and production of 200,000 units. Other information for the year included: Direct manufacturing labor Variable manufacturing overhead Direct materials Variable selling expenses Fixed administrative expenses Fixed manufacturing overhead There was no beginning inventory $150,000 100,000 150,000 100,000 100,000 200,000 Required: a. Compute the ending finished goods inventory under both absorption and variable costing Absorption? Variable? b. Compute the cost of goods sold under both absorption and variable costing. Absorption? Variable?
Explanation / Answer
Particulars Total Unit Produced / Sold Per Unit Absorption Costing Variable Costing Direct Manufacturing Labor 1,50,000 2,00,000 0.75 Yes Yes Variable Manufacturing Overhead 1,00,000 2,00,000 0.50 Yes Yes Direct Materials 1,50,000 2,00,000 0.75 Yes Yes Variable Selling Expense 1,00,000 1,40,000 0.71 No No Fixed Administrative Expense 1,00,000 2,00,000 0.50 No No Fixed Manufacturing Overhead 2,00,000 2,00,000 1.00 Yes No Absorption Costing Variable Costing Unit Cost 3 2 Ending No of Units 60,000 60,000 Ending Inventory 1,80,000 1,20,000 Absorption Costing Variable Costing Unit Cost 3 2 No of units Sold 1,40,000 1,40,000 Cost of Goods Sold 4,20,000 2,80,000
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