Hi, need help checking the answer to this 2 exercises. #1(D) and #2 (A). Ruiz Co
ID: 2509285 • Letter: H
Question
Hi, need help checking the answer to this 2 exercises. #1(D) and #2 (A).
Ruiz Company has no beginning and ending inventories, and reports the following data about its only product:
Direct materials used $250,000
Direct labor $100,000
Fixed indirect manufacturing $100,000
Fixed selling and administrative $150,000
Variable indirect manufacturing $25,000
Variable selling and administrative $110,000
Selling price(per unit) $90
Units produced and sold 14,000
Ruiz Company uses the absorption approach to prepare the income statement. What is the manufacturing cost of goods sold?
A) $270,000
B) $350,000
C) $450,000
D) $475,000
Stone Company has no beginning and ending inventories, and reports the following data about its only product:
Direct materials used $400,000
Direct labor $100,000
Fixed indirect manufacturing $125,000
Fixed selling and administrative $200,000
Variable indirect manufacturing $25,000
Variable selling and administrative $90,000
Selling price(per unit) $75
Units produced and sold 10,000
Stone Company uses the absorption approach to prepare the income statement. What is the gross margin?
A) $0
B) $50,000
C) $75,000
D) $100,000
Explanation / Answer
A Direct Material 250000 Direct Labor 100000 Fixed Indirect Manufacturing OH 100000 Fixed Selling and Administrative 150000 Variable Indirect Manufacturing OH 25000 Variable Selling and Administrative 110000 SP PU 90.00 Unit Produced & Sold 14000 Calculation of Cost of Goods Sold Under Absorption Costing: Direct Material 250000 Direct Labor 100000 Fixed Indirect Manufacturing OH 100000 Variable Indirect Manufacturing OH 25000 Total 475000 Answer is D Note: Variable & Fixed Selling and Administrative OH are not part of COGS under Absorption Costing B Direct Material 400000 Direct Labor 100000 Fixed Indirect Manufacturing OH 125000 Fixed Selling and Administrative 200000 Variable Indirect Manufacturing OH 25000 Variable Selling and Administrative 90000 SP PU 75.00 Unit Produced & Sold 10000 Calculation of Cost of Goods Sold Under Absorption Costing: Direct Material 400000 Direct Labor 100000 Fixed Indirect Manufacturing OH 125000 Variable Indirect Manufacturing OH 25000 Total 650000 Sales (10000*75) 750000 Less: COGS (Calculated above) 650000 Gross Profit 100000 Answer is D Note: Variable & Fixed Selling and Administrative OH are not part of COGS under Absorption Costing
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