11) Raeon, Inc. produces car radios. The selling price per radio is $1,000. Cost
ID: 2372168 • Letter: 1
Question
11) Raeon, Inc. produces car radios. The selling price per radio is $1,000. Costs involved in production are: Direct material.....................$100 Direct labor.............................100 Variable manufacturing overhead...........50 Fixed manufacturing overhead per year.........$250,000 In addition, the company has fixed selling and administrative cost: Fixed selling costs per year............$175,000 Fixed administrative costs per year.........$75,000 During the year, Raeon produces 1,000 car radios and sells 800 radios.A) how much is profit using full costing? B) How much fixed manufacturing overhead is in ending inventory under full costing? 11) Raeon, Inc. produces car radios. The selling price per radio is $1,000. Costs involved in production are: Direct material.....................$100 Direct labor.............................100 Variable manufacturing overhead...........50 Fixed manufacturing overhead per year.........$250,000 In addition, the company has fixed selling and administrative cost: Fixed selling costs per year............$175,000 Fixed administrative costs per year.........$75,000 During the year, Raeon produces 1,000 car radios and sells 800 radios.
A) how much is profit using full costing? B) How much fixed manufacturing overhead is in ending inventory under full costing?
Explanation / Answer
example.....................Units sold 10,000 units produced 10,000 fixed production costs $600,000 variable production costs per unit $100 selling price per unit $200 fixed selling & admin expense $200,000............................. solution................ Sales ($200 * 10000 units sold) $2000000 Less: Fixed production cost $600000 Less: Variable production cost ($100 * 10000 units sold) $1000000 Less: Fixed selling and admin expense $200000 Net profit $200000 Since, quantity produced is equal to quantity sold, you won't have any ending inventory unless you have undisclosed beginning inventory.
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