Soccer nets for use in professional games. They sell them for $200 each. Selecte

Question

Soccer nets for use in professional games. They sell them for $200 each. Selected data for the company's operations last year follow
Units in beginning inventory 0
Units produced 500
Units sold 300
Units in ending inventory 200
Variable costs per unit:
Direct materials $75
Direct labor 30
Variable manufacturing overhead 10
Variable selling and administrative 5
Fixed costs:
Fixed manufacturing overhead $2,000
Fixed selling and administrative $1,000
A. Assume that the company uses variable costing, compute the net operating income. Show computations.
B. Assuming that the company uses absorption costing, compute the net operating income show computations.

Explanation / Answer

a : Sales $60000 (200 *300) Cost of Goods Sold Beginning Inventory 0 Cost of Goods Manufactured $ 57500 (75+30+10) *500 Goods Available for Sale 57500 Ending Inventory 23000 (75+30+10) * 200 Variable Cost of Goods Sold 34500 Variable Selling 1500 ( 5 * 300) Total Variable Costs 36000 Contribution Margin 24000 Fixed manufacturing overhead 2000 Fixed selling and administrative 1000 Total fixed cost 3000 Net Income 21000 B: Sales $60000 (200 *300) Cost of Goods Sold Beginning Inventory 0 Cost of Goods Manufactured 72000 (144 * 500) Goods Available for Sale 72000 Ending Inventory 28800 (144) * 200 Cost of Goods Sold 43200 Gross Profit 16800 Variable selling and administrative 1500 Fixed selling and administrative 1000 Total selling and administrative expenses 2500 Net Income 14300 Absorption cost : 75 + 30 + 5 + 2000/500 = 114

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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