Session 06 Solutions

Session 06 Solutions - Example At the beginning of 2008,...

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Example At the beginning of 2008, Carter Corp. prepared an annual budget in which variable production costs (including variable overhead) were expected to be $20 per unit and fixed manufacturing costs – all overhead – were predicted to be $4,000 for the year. Its planned production for the year was 800 units. At the beginning of 2008 , it had 200 units in finished goods inventory. (For 2007, variable and fixed manufacturing costs allocated to units produced were $20 per unit and $5 per unit, respectively.) The firm's actual results for 2008 were as follows: Production - 600 units; Sales - 700 units at $30 each. Actual total fixed costs were equal to budgeted total fixed costs, and actual variable costs per unit were equal to budgeted variable costs per unit. Carter uses an actual costing system. Other (non-manufacturing) costs for the year were: Marketing $ 0.50 per unit sold Administrative $750 (all fixed)
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= Actual fixed costs = Actual fixed costs/unit Actual variable costs/unit $6.67 = 600 $4,000
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This note was uploaded on 10/06/2010 for the course FNCE 100 taught by Professor Jaffe during the Spring '10 term at UNC Asheville.

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Session 06 Solutions - Example At the beginning of 2008,...

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