Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Question
Chapter 6, Problem 6.18E
(a)
To determine
Variable Costing:
The variable costing is the method of costing in which only the variable production costs such as the direct material, direct cost, and variable
To Determine: The L Company’s finished goods inventory cost on December 31 under variable costing.
(b)
To determine
Absorption Costing:
The absorption costing is the method of costing in which all the costs are included which are associated with the manufacturing process of the product.
To Determine: In which costing method, Company L shows a higher net income for the year.
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Check out a sample textbook solutionStudents have asked these similar questions
A review of Plunkett Corporation's accounting records for last year disclosed the following selected
Variable costs
Direct materials used
$ 56,000
Direct labor
$179,100
Manufacturing overhead
$154,000
Selling costs
$108,400
Fixed costs
Manufacturing overhead
$267,000
Selling costs
$121,000
Administrative costs
$235,900
In addition, the company suffered a $27,700 uninsured factory fire loss during the year. What were Plunkett's product costs and period costs for last year
Bonita Company produced 10,200 units during the past year but sold only 8,700 of the units. The following additional information is
also available:
Direct materials used
Direct labour incurred
Variable manufacturing overhead
Fixed manufacturing overhead
Fixed selling and administrative expenses
Variable selling and administrative expenses
$88,740
34,170
22,440
46,410
(a)
69,400
10,200
There was no work in process inventory at the beginning of the year. Bonita did not have any beginning finished goods inventory either.
Calculate Bonita Company's finished goods inventory cost on December 31 under variable costing. (Round per unit calculations to 2
decimal places, e.g. 15.25 and final answer to 0 decimal places, e.g. 125.)
During March of the current year, Rolly Company purchased P3,500,000 raw materials. During the month, Reyes incurred P2,040,000 direct labor cost and applied 80% of direct labor cost. During the same month, there were changes in inventories as follows: Increase in raw materials P100,000; Decrease in work in process P150,000 and decrease in finished goods 75,000. If the goods available for sale is P7,500,000, what is the amount of finished goods at March 1?
a.P203,000
b.P278,000
c.P 0
d.P 75,000
Chapter 6 Solutions
Managerial Accounting: Tools for Business Decision Making
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