The following data relate to ATV Company, a new corporation, during a period whe
ID: 2456305 • Letter: T
Question
The following data relate to ATV Company, a new corporation, during a period when the firm produced 120,000 units and sold 95,000 units.
Direct materials used $395,000
Direct labor 205,000
Fixed manufacturing overhead 245,000
Variable manufacturing overhead 125,000
Fixed selling and administrative expense 295,000
Variable selling and administrative expense 50,000
The company met its original planned production target of 120,000 units. There were no variances during the period, and the firm's selling price is $18 per unit.
Variable selling and administrative expense 50,000 Required:
A. What is the cost of ATV's end-of-period finished-goods inventory under the variable-costing method?
B. Calculate the company's variable-costing income.
C. Calculate the company's absorption-costing income.
Explanation / Answer
A) Closng Inventory at the end of year
Total Variable Cost for manufacturing 120000 units
Per Unit V. Cost (725000/120000) 6.04
Cost of Closing Finished Goods (25000*6.04) 151042
Opening Stock 0 Add Production 120000 Less Sales 95000 Closing Stock 25000
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