Due May 3, 2007
Please work the problems in the order in which they are assigned.
Please put your section number on your submitted homework.
Pneumotech manufactures industrial air compressors.
The following data are for October
The company had 200 units in beginning inventory.
In October, 1,500 units were
produced, and 1,200 were sold.
The average selling price was $4,500.
Variable Costs (per unit)
Variable selling and admin.
Fixed Costs (total)
Selling and admin.
Compute the cost of ending inventory using absorption costing.
Pneumotech uses LIFO inventory costing and carries the beginning inventory at $3,100
fully absorbed cost per unit.
There are 200 units @$3,100, and 300 units @ $3,466.67, totaling $1,660,000.
Compute the cost of ending inventory using variable costing.
Pneumotech uses LIFO inventory costing and carries the beginning inventory at $2,350
variable cost per unit.
There are 200 units @$2,350, and 300 units @ $2,400, totaling $1,190,000.
Find the operating income for the month, using both absorption and variable costing.
Income Statement (GAAP)
For the month ended October 31, 2006
Cost of Goods Sold