FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Dowell Company produces a single product. Its income under variable costing for its first two years of operation follow.
Variable Costing Income
Income
Year 1
$ 49,000
Year 2
$ 670,000
Additional Information
a. Sales and production data for these first two years follow.
Units
Units produced
Units sold
Year 1
50,900
39,000
Year 2
50,900
62,800
b. The company's $31 per unit product cost (for both years) using absorption costing consists of the following.
Direct materials
Direct labor
Variable overhead
Fixed overhead ($490,000/49,000 units)
$ 5
9
7
10
$ 31
Total product cost per unit
Required:
Prepare a statement to convert variable costing income to absorption costing income for both years.
Note: Leave no cells blank - be certain to enter "0" wherever required.
Dowell Company
Convert Variable Costing Income to Absorption Costing Income
Variable costing income
Add: Fixed overhead in ending FG inventory
Less: Fixed overhead in beginning FG inventory
Absorption costing income
Year 1
Year 2
$
49,000 $
670,000
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Transcribed Image Text:Dowell Company produces a single product. Its income under variable costing for its first two years of operation follow. Variable Costing Income Income Year 1 $ 49,000 Year 2 $ 670,000 Additional Information a. Sales and production data for these first two years follow. Units Units produced Units sold Year 1 50,900 39,000 Year 2 50,900 62,800 b. The company's $31 per unit product cost (for both years) using absorption costing consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($490,000/49,000 units) $ 5 9 7 10 $ 31 Total product cost per unit Required: Prepare a statement to convert variable costing income to absorption costing income for both years. Note: Leave no cells blank - be certain to enter "0" wherever required. Dowell Company Convert Variable Costing Income to Absorption Costing Income Variable costing income Add: Fixed overhead in ending FG inventory Less: Fixed overhead in beginning FG inventory Absorption costing income Year 1 Year 2 $ 49,000 $ 670,000
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