Question 6 during its first year of operations xyz

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Question 6 During its first year of operations, XYZ Company produced 26,000 units and sold 16,000 units. XYZ Company produced 40,000 units and sold 44,000 units during its second year of operations. The cost data listed below was taken from XYZ's accounting records for its first two years of operations : Year 1 Year 2 Direct materials ..................... $325,000 $560,000 Direct labor ......................... $468,000 $800,000 Variable overhead .................... ? $480,000 Variable selling & administrative .... $163,800 $240,000 Fixed overhead ....................... ? $320,000 Fixed selling & administrative ....... $130,000 $180,000 Assume the selling price of XYZ Company's product was $75 per unit for both years. During its first year of operations, XYZ Company reported an ending finished goods inventory of $505,000 using absorption costing and a contribution margin of $353,000 using variable costing. Calculate the net income reported by XYZ Company in year 2 using absorption costing a weighted average inventory cost flow assumption and . =
Question 7 During its first year of operations, XYZ Company produced 26,000 units and sold 16,000 units. XYZ Company produced 40,000 units and sold 44,000 units during its second year of operations. The cost data listed below was taken from XYZ's accounting records for its first two years of operations : Year 1 Year 2 Direct materials ..................... $325,000 $560,000 Direct labor ......................... $468,000 $800,000 Variable overhead .................... ? $480,000 Variable selling & administrative .... $163,800 $240,000 Fixed overhead ....................... ? $320,000 Fixed selling & administrative ....... $130,000 $180,000 Assume the selling price of XYZ Company's product was $75 per unit for both years. During its first year of operations, XYZ Company reported an ending finished goods inventory of $505,000 using absorption costing and a contribution margin of $353,000 using variable costing. Calculate the net income reported by XYZ Company in year 2 using variable costing and a FIFO inventory cost flow assumption . Correct answer $569,000 Explanation: Since XYZ Company is using a FIFO inventory cost flow assumption, they will expense as part of cost of goods sold all units remaining from year 1 first and then expense as part of cost of goods sold units produced in year 2. Variable costing product cost per unit (Year 2) : Direct materials ................... $ 560,000 Direct labor ....................... 800,000 Variable overhead .................. 480,000 Total product cost ................. $1,840,000 ÷ Units produced ................... 40,000

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