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Unformatted text preview: Charles Blackstone ACC/561 ACCOUNTING (Cost Allocation) March 7, 2011 13-B3 Comparison of Variable Costing and Absorption Costing Consider the following information pertaining to a years operations of Youngstown Manufacturing: Units sold 1,400 Units produced 1,600 *Direct labor $4,200 *Direct materials used 3,500 *Fixed manufacturing overhead 2,200 *Variable manufacturing overhead 300 Selling and administrative expenses (all fixed) 700 Beginning inventories 0 Contribution margin 5,600 Direct-material inventory, end 800 There are no work-in-process inventories. 1. What is the ending finished-goods inventory cost under absorption costing? $1,275 Solution: *Add the DMU, DL,VMO, and FMO = $10,200 Multiply $10,200 x 200 (difference of units produced and those sold) /units produced (1,600) 2. What is the ending finished-goods inventory cost under variable costing? $1,000 Solution: *Add the DMU,DL,and VMO ( and no FMO) = $8,000 Multiply $8,000 x 200 /units produced (1,600) 13-45 Variable and Absorption Costing...
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This note was uploaded on 06/13/2011 for the course ACCT561 SH2MB906 taught by Professor Nathanielmanning during the Spring '09 term at University of Phoenix.
- Spring '09