13-2 acc561 - 13-45 Determine operating income for 20X7,...

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Unformatted text preview: 13-45 Determine operating income for 20X7, assuming the firm uses the variable-costing approach to product costing. (Do not prepare a statement.) Variable Manufacturing Cost per Unit = $120,000 / 15,000 units = $8 per unit Variable Nonmanufacturing Cost per Unit = $24,000 / 12,000 units = $2 per unit Operating Income = Sales – Variable manufacturing cost – variable non manufacturing cost – fixed manufacturing costs – fixed non manufacturing costs. = (12,000 x $17) – (12,000 x $8) – (12,000 x $2) – $63,000 – $18,000 = $204,000 – $96,000 – $24,000 – $63,000 – $18,000 = $3,000 Assume that there is no January 1, 20X7, inventory; no variances are allocated to inventory; and the firm uses a “full absorption” approach to product costing. Compute (a) the cost assigned to December 31, 20X7, inventory; and Ending Inventory = 15,000 units – 12,000 units = 3,000 units Cost of Ending Inventory = 3,000 units x ($8 + $63,000 / 18,000 units) = 3,000 units x $11.50 = $34,500 (b) Operating income for the year ended December 31, 20X7. Total Cost = $120,000 + $63,000 + $24,000 + $18,000= $225,000 Operating Income = (12,000x $17) – ($225,000 – $34,500 = $204,000 – $190,500 = 13,500 ...
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This note was uploaded on 06/04/2010 for the course BUSINESS M ACC561 taught by Professor Johnson during the Spring '10 term at University of Phoenix.

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13-2 acc561 - 13-45 Determine operating income for 20X7,...

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