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orie_350_ice_april_9_errors_fixed - 2 ADC produces plastic...

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ORIE 350 Spring 2008 ICE April 9, 2008 1. Ionaire Manufacturing has the following costs and prices associated with the production last month for one of its electrostatic air cleaners. Beginning Inventory: 1,000 units Production: 10,000 units Sales 8,500 units Direct materials $14 per unit Direct labor $10 per unit Variable overhead $8.50 per unit Fixed overhead $200,000 per month Selling expenses $115,000 per month Admin. expenses $112,000 per month Selling price $79.95 per unit $79.75 per unit (wholesale) The inventory, if carried on a fully absorbed cost basis, would have a cost of $50 per unit. The company uses periodic FIFO. a) Provide the income statement for the month using absorption costing b) Provide the income statement for the month using throughput costing
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Unformatted text preview: 2. ADC produces plastic that is used for injection molding applications. In 1999, the first year of operations, the company produced 4,000 tons of plastic and sold 3,500 tons. In 2000, the production was 3,000 tons, and 3,200 3,800 tons were sold. In each year, the selling price was $2,500 per ton. Variable manufacturing costs were $375 per ton, variable selling costs were $250 per ton, fixed manufacturing costs were $3,000,000 per year, and fixed administrative costs were $600,000 per year. a) prepare income statements for each year using absorption costing, and LIFO. b) prepare income statements for each year using throughput costing...
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