Also assume no price efficiency or spending variances Any production volume

Also assume no price efficiency or spending variances

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the same as the current period unit product cost. Also, assume no price, efficiency, or spending variances. Any production volume variance is written off to cost of goods sold in the period it is incurred. Unit manufacturing costs are: Direct materials $2.00 Direct manufacturing labor $5.00 Variable MOH costs $1.50 Total fixed MOH costs (budgeted and actual) $10,000 per year Marketing expenses - variable $1.00 per unit Marketing expenses - fixed $12,000 per year Required: a. Prepare an income statement using absorption costing. b. Will the income based on variable costing be higher or lower than the income based on absorption costing – by how much? Explain your answer. 3
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Chapter 7&8 solutions C7 Problem DM Price $5,000U DM Efficiency $2,000U DML Price$2,800F DML Efficiency $3,600U C9 Problem a) Unit cost = $11, PVV = $500 F, OI = $28,500 b) Inventory went down by 800 units, therefore OI under VC will be 800 units*$2.50 (FMOH/unit) = $2000 higher than under AC 4 Question Answer 1 2 3 4 5 6 7 8 B A B D D C D B
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  • Spring '14
  • DavidR.Upton
  • Abernathy Corporation

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