2.73 - 100,000 Factory overhead (unit-level) 0.80 = $80,000...

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2.73 (45 min) Comparison of costing methods Sales price $15 Units sold 80,000 Units produced 100,000 Direct materials (unit-level cost) $240,00 0 Direct labor (unit-level cost) 160,000 Factory overhead (unit-level cost) 80,000 Factory overhead (capacity cost) 240,000 Selling and administrative (unit-level cost) 80,000 Selling and administrative (capacity cost) 128,000 a) Absorption cost per unit: Materials (unit-level) $ 2.40 = $240,000 / 100,000 Direct labor (unit-level) 1.60 = $160,000 / 100,000 Factory overhead (unit-level) 0.80 = $80,000 / 100,000 Factory overhead (capacity) 2.40 = $240,000 / 100,000 Total absorption cost $ 7.20 b) Variable product cost per unit: Materials (unit-level) $ 2.40 = $240,000 / 100,000 Direct labor (unit-level) 1.60 = $160,000 /
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Unformatted text preview: 100,000 Factory overhead (unit-level) 0.80 = $80,000 / 100,000 Total variable product cost $ 4.80 c) Variable costing operating profit: Sales $1,200, 000 = $15 x 80,000 Variable product cost 384,000 = $4.80 x 80,000 Variable selling cost 80,00 0 Contribution margin 736,000 Factory overhead 240,000 Selling & admin 128,000 Operating income $368,0 00 d) Absorption costing operating profit: Sales $1,200, 000 = $15 x 80,000 Cost of goods sold 576,00 0 = $7.20 x 80,000 Gross margin 624,000 Selling & admin 208,00 0 Operating income $416,0 00 Difference from variable costing $ 48,000 e) Absorption cost ending inventory $ 144,000 = $7.20 x 20,000 f) Variable cost ending inventory 96,000 = $4.80 x 20,000 Difference $48,000...
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This note was uploaded on 11/25/2010 for the course ACCT 33010 taught by Professor Staff during the Spring '08 term at Kent State.

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2.73 - 100,000 Factory overhead (unit-level) 0.80 = $80,000...

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