Sparn Limited incurs the following costs to produce and sell a single product: Variable costs per unit: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses During the last year, 54,000 units were produced and 31,500 units were sold. The Finished Goods Inventory account at the end of the year shows a balance of $285,000 for the 7,500 unsold units. Absorption costing Required: 1-a. Is the company using absorption costing or variable costing to cost units in the Finished Goods Inventory account? O Variable costing 1-b. Show computations to support your answer. Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Total cost, 7,500 units Variable Absorption Costing Costing $ 23 11 4 0 $ 324,000 504,000 0

Sparn Limited incurs the following costs to produce and sell a single product: Variable costs per unit: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses During the last year, 54,000 units were produced and 31,500 units were sold. The Finished Goods Inventory account at the end of the year shows a balance of $285,000 for the 7,500 unsold units. Absorption costing Required: 1-a. Is the company using absorption costing or variable costing to cost units in the Finished Goods Inventory account? O Variable costing 1-b. Show computations to support your answer. Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Total cost, 7,500 units Variable Absorption Costing Costing $ 23 11 4 0 $ 324,000 504,000 0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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