24.9 (24000) = 597600 I am trying to figure out where the 12,000 came from. Or i

Question

24.9 (24000) = 597600 I am trying to figure out where the 12,000 came from. Or if this is even right at all.

Variable Costing Income Statement On July 31, 2014, the end of the first month of operations, Rhys Company prepared the following income statement, based on the absorption costing concept: $4,440,000 Cost of goods sold Cost of Less ending inventory (24,000 units) . . . . . … Cost of goods sold 3,120,000 624,000 2,496,000 1,944,000 288,000 1,656,000 Selling and administrative expenses . . . . . . . . . … Hint s) Hide a. Prepare a variable costing income statement, assuming that the fixed manufacturing costs were $132,000 and the variable selling and administrative expenses were $115,200. In your computations, round unit costs to two decimal places and round final answers to the nearest dollar Rhys Company Income Statement-Variable Costing For the Month Ended July 31, 2014 Sales 4440000 Variable cost of goods sold: Variable cost of goods manufac 2988000 Less ending inventory 597600

Explanation / Answer

Calculation of ending inventory as per variable costing :

Cost of Goods Manufactured as per absorption costing =

$        3,120,000

Less: Fixed Manufacturing costs

$         (132,000)

Cost of Goods Manufactured as per variable costing =

$        2,988,000

Units sold

96000

Add: Ending inventory units

24000

Units Manufactured =

120000

Manufacturing cost per unit = 2988000 / 120000

$                24.90

Ending inventory units

24000

Cost of Ending inventory = 24000 Units *$24.90

$            597,600

Calculation of ending inventory as per variable costing :

Cost of Goods Manufactured as per absorption costing =

$        3,120,000

Less: Fixed Manufacturing costs

$         (132,000)

Cost of Goods Manufactured as per variable costing =

$        2,988,000

Units sold

96000

Add: Ending inventory units

24000

Units Manufactured =

120000

Manufacturing cost per unit = 2988000 / 120000

$                24.90

Ending inventory units

24000

Cost of Ending inventory = 24000 Units *$24.90

$            597,600

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