question archive For 2011, Nichols, Inc
For 2011, Nichols, Inc
Subject:AccountingPrice:4.87 Bought8
For 2011, Nichols, Inc., had sales of 150,000 units and production of 200,000 units. Other information for the year included:
|
Direct manufacturing labor |
$187,500 |
|
Variable manufacturing overhead |
100,000 |
|
Direct materials |
150,000 |
|
Variable selling expenses |
100,000 |
|
Fixed administrative expenses |
100,000 |
|
Fixed manufacturing overhead
There was no beginning inventory. |
200,000 |
Required:
- Compute the ending finished goods inventory under both absorption and variable costing.
- Compute the cost of goods sold under both absorption and variable costing.
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ANSWER:
|
a. |
|
Absorption |
Variable |
|
|
Direct |
materials |
$150,000 |
$150,000 |
|
|
Direct |
manufacturing labor |
187,500 |
187,500 |
|
|
Variable manufacturing overhead |
100,000 |
100,000 |
||
|
Fixed manufacturing overhead |
200,000 |
0 |
||
|
Total |
$637,500 |
$437,500 |
||
Unit costs:
$637,500/200,000 units $3.1875
$437,500/200,000 units $2.1875
Ending inventory:
50,000 units × $3.1875 $159,375
50,000 units × $2.1875 $109,375
b. Cost of goods sold:
150,000 × $3.1875 $478,125
150,000 × $2.1875 $328,125
