4. (7 points) During the most recent year, Boston Corp. had the following data:

Question

4. (7 points) During the most recent year, Boston Corp. had the following data: Beginning inventory in units Units produced Units sold (S125 per unit) Variable costs per unit: Direct materials Direct labor Variable overhead Fixed costs 15,400 8,200 $ 13 ixed overhead per unit produced $23 $ 185 xed selling and administrative Required: A. How many units are in ending inventory? B. Using absorption costing, calculate the per-unit product cost. What is the value of ending inventory? C. Using variable costing, calculate the per-unit product cost. What is the value of ending inventory? D. Prepare an income statement using absorption costing. E. Prepare an income statement using variable costing.

Explanation / Answer

Req A: Number of units of Ending inventory: Uniits produced: 15400 Less: Units sold 8200 Ending inventory units 7200 Req B: Unit cost under absorption costing Direct Material 13 Direct labour 6 Variable Manufacturing overheads 8 Fixed Manufacturing overheads 23.00 Absorption costing unit prroduct cost 50.00 The value of Ending Inventory: 7200 units @$50= $ 360,000 Req C: Units cost under variable costing Direct Material 13 Direct labour 6 Variable Manufacturing overheads 8 Variable costing unit prroduct cost 27.00 The value of ending inventory (7200 units @$27): $194,400 Req D: The Absorption Costing Income Statement Amount Sales $1,025,000 Cost of Goods sold 410000 Gross Margin $615,000 Selling and distribution expense 185,000 Net operating income 430,000 Req E: The Variable Costing Income Statement YEAR 1 Sales 1,025,000 Less: Variable cost 221400 Contribution margin 803,600 Fixed expense:    Fixed Manufacturing overheads 354,200    Fixed selling expense 185,000 Net operating Income 264,400

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