Dimmick Corporation produces and sells a single product at $10per unit. During 2012, the company produced 100,000 units, 90,000of which were sold during the year. All ending inventory was infinished goods inventory; there was no inventory on hand at thebeginning of the year. The following data relate to the company'sproduction process:
Direct materials used in production $ 200,000
Direct labor 180,000
Variable Manufacturing overhead 150,000
Fixed Manufacturing overhead 80,000
Variable Selling and Administrative 175,000
Fixed Selling and Administrative 65,000
Required: Calculate the following.
(a) The unit cost of ending inventory on the balance sheetprepared for stockholders. ______________
(b) The unit cost of ending inventory on a variable cost balancesheet. ______________
(c) The operating income using absorption costing.______________
(d) The operating income using variable costing.______________
Please post solutions - need for a study guide. Thank you.
Dimmick Corporation produces and sells a single product at $10per unit. During 2012, the company produced 100,000 units, 90,000of which were sold during the year. All ending inventory was infinished goods inventory; there was no inventory on hand at thebeginning of the year. The following data relate to the company'sproduction process:
Direct materials used in production $ 200,000
Direct labor 180,000
Variable Manufacturing overhead 150,000
Fixed Manufacturing overhead 80,000
Variable Selling and Administrative 175,000
Fixed Selling and Administrative 65,000
Required: Calculate the following.
(a) The unit cost of ending inventory on the balance sheetprepared for stockholders. ______________
(b) The unit cost of ending inventory on a variable cost balancesheet. ______________
(c) The operating income using absorption costing.______________
(d) The operating income using variable costing.______________
Please post solutions - need for a study guide. Thank you.
Related questions
The information below representsthe beginning and ending inventory amounts along with theproduction and sales for the month in umbrella units
Beginning Inventory: 0 Umbrellas
Production: 80,000 Umbrellas
Sales: 60,000 Umbrellas
Ending Inventory: 20,000 Umbrellas
The Hampshire Company manufactures umbrellas that sell for$12.50 each. In 2014, the company made and sold 60,000 umbrellas.The company had fixed manufacturing costs of $216,000. It also hadfixed costs for administration of $79,525. The per-unit costs ofeach umbrella are as follows:
Using the information
Prepare a variable costing income statement.
Prepare an absorption costing income statement.
Direct Materials: $3.00
Direct Labor: $1.50
Variable Manufacturing Overhead:$0.40
Variable Selling Expenses: $1.10
| Requirement 1 | ||||
| Hampshire Company | ||||
| Variable Costing IncomeStatement | ||||
| Units | $ | |||
| Sales | X | $ | $ | |
| Variable Cost of Goods Sold: | ||||
| Beginning Inventory | $ | |||
| Direct Materials | X | $ | $ | |
| Direct Labor | X | $ | $ | |
| Manufacturing Overhead | X | $ | $ | |
| Total Variable Costs | $ | |||
| Cost of Good Available for Sale | $ | |||
| Deduct Ending Inventory | X | $ | $ | |
| Variable Costs of GoodsSold | $ | |||
| Variable Selling Costs | X | $ | $ | $ |
| Contribution Margin | $ | |||
| Fixed Costs: | ||||
| Fixed Manufacturing Costs | $ | |||
| Fixed Administrative Costs | $ | |||
| Operating Income | $ | |||
| Requirement 2 | ||||
| Hampshire Company | ||||
| Absorption Costing IncomeStatement | ||||
| Units | $ | |||
| Sales | X | $ | $ | |
| Variable Cost of Goods Sold: | ||||
| Beginning Inventory | $ | |||
| Direct Materials | X | $ | $ | |
| Direct Labor | X | $ | $ | |
| Manufacturing Overhead | X | $ | $ | |
| Total Variable Costs | $ | |||
| Allocated Fixed Manufacturing Costs | X | $ | $ | |
| Cost of Good Available for Sale | $ | |||
| Deduct Ending Inventory | X | $ | $ | |
| Costs of GoodsSold | $ | |||
| Gross Margin | $ | |||
| Fixed Costs: | ||||
| Variable Selling Costs | X | $ | $ | |
| Fixed Administrative Costs | $ | |||
| Operating Income | $ | |||
The Dorset Corporation produces and sells a single product. The following data refer to the year just completed:
| Beginning inventory | 0 | |
| Units produced | 34,000 | |
| Units sold | 25,900 | |
| Selling price per unit | $ | 482 |
| Selling and administrative expenses: | ||
| Variable per unit | $ | 16 |
| Fixed per year | $ | 362,600 |
| Manufacturing costs: | ||
| Direct materials cost per unit | $ | 240 |
| Direct labor cost per unit | $ | 56 |
| Variable manufacturing overhead cost per unit | $ | 34 |
| Fixed manufacturing overhead per year | $ | 578,000 |
Assume that direct labor is a variable cost.
Required:
a. Compute the unit product cost under both the absorption costing and variable costing approaches.
b. Prepare an income statement for the year using absorption costing.
c. Prepare an income statement for the year using variable costing.
d. Reconcile the absorption costing and variable costing net operating income figures in (b) and (c) above.
