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DB Week 4, Schultz

# DB Week 4, Schultz - BUS5431 Managerial Accounting Week 4...

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04/3/2011 BUS5431 Managerial Accounting Week 4 Homework Chapter 5 Exercise 11 Variable cost per unit \$12.00 Fixed manufacturing overhead per unit (\$180,000 ÷ 40,000 units) 4.50 Full cost per unit \$16.50 Ending inventory under full costing: \$16.50 x 3,000 units = \$49,500 Exercise 18 The difference in net income between full and variable costing is \$339,500 – 326,000 = \$13,500. This is equal to the amount of fixed manufacturing overhead in ending inventory under full costing (\$4.50 x 3,000 units = \$13,500). Problem 2 2011 2012 2013 Fixed manufacturing overhead \$ 45,000 \$ 45,000 \$ 45,000 Divided by units produced 3,000 4,500 1,500 Fixed manufacturing overhead per unit 15 10 30 Variable manufacturing costs 75 75 75 Full cost per unit \$ 90 \$ 85 \$ 105 Sales (\$225 x 3,000 units) \$ 675,000 \$ 675,000 \$ 675,000 Less cost of goods sold: (\$90 x 3,000) 180,000 (\$85 x 3,000) 255,000 (\$85 x 1,500 + \$105 x 1,500) 285,000 Gross margin 495,000 420,000 390,000 Less selling and administrative expense 4,500 4,500 4,500 Net income \$ 490,500 \$ 415,500 \$ 385,500 \$ 1,291,500 Ending inventory -0-

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(\$85 x 1,500) \$ 127,500 -0- b. Even though sales are the same in each period, profit fluctuates. This result is from the different quantities produced each period which affects the fixed manufacturing overhead in cost of goods sold versus ending inventory.
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