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    Strat Cost Ass 6

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    Sunghoon Ssi
    The document provides information on variable costing and calculating operating income using variable costing. It details that the variable cost per unit is $9.50. For the month of October, the company produced 40,000 units, sold 38,400 units, and had 1,600 units in ending inventory valued at $15,200. The variable costing income statement for October shows operating income of $100,220. For November, the company had beginning inventory of 1,600 units, produced 40,000 units, sold 41,000 units, and ending inventory was 600 units valued at $5,700. The variable costing income statement for November shows operating income of $134,800.

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    Strat Cost Ass 6

    Uploaded by

    Sunghoon Ssi
    23 views2 pages
    The document provides information on variable costing and calculating operating income using variable costing. It details that the variable cost per unit is $9.50. For the month of October, the company produced 40,000 units, sold 38,400 units, and had 1,600 units in ending inventory valued at $15,200. The variable costing income statement for October shows operating income of $100,220. For November, the company had beginning inventory of 1,600 units, produced 40,000 units, sold 41,000 units, and ending inventory was 600 units valued at $5,700. The variable costing income statement for November shows operating income of $134,800.

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    cornerstone exercises

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    Strat cost ass 6

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    The document provides information on variable costing and calculating operating income using variable costing. It details that the variable cost per unit is $9.50. For the month of October, the company produced 40,000 units, sold 38,400 units, and had 1,600 units in ending inventory valued at $15,200. The variable costing income statement for October shows operating income of $100,220. For November, the company had beginning inventory of 1,600 units, produced 40,000 units, sold 41,000 units, and ending inventory was 600 units valued at $5,700. The variable costing income statement for November shows operating income of $134,800.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    23 views2 pages

    Strat Cost Ass 6

    Uploaded by

    Sunghoon Ssi
    The document provides information on variable costing and calculating operating income using variable costing. It details that the variable cost per unit is $9.50. For the month of October, the company produced 40,000 units, sold 38,400 units, and had 1,600 units in ending inventory valued at $15,200. The variable costing income statement for October shows operating income of $100,220. For November, the company had beginning inventory of 1,600 units, produced 40,000 units, sold 41,000 units, and ending inventory was 600 units valued at $5,700. The variable costing income statement for November shows operating income of $134,800.

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    Cornerstone Exercise 2.

    4 Variable Costing, Value of Ending Inventory, Operating


    Income

    Required:

    1. Cost of each unit using variable costing

    Direct materials $5.00


    Direct labor 3.00
    Variable overhead 1.50
    Total cost $9.50

    2. Units in ending inventory = Units, beginning inventory + Units produced – Units


    sold
    Units in ending inventory = 0 + 40,000 – 38,400
    Units in ending inventory = 1,600 units

    Using variable costing:


    Cost of ending inventory = 1,600 units x $9.50
    Cost of ending inventory = $15,200

    3. Income statement of Pattison Products, Inc using absorption costing.

    Pattison Products, Inc.


    Variable-Costing
    Income Statement for the Month of October

    Percent of sales
    Sales ($24 × 38,400) $921,600 100.00%
    Less:
    Variable cost of goods sold ($9.50 × 38,400) (364,800) (39.58%)
    Variable marketing expenses ($1.20 × 38,400) (46,080) (5.00%)
    Contribution margin $510,720 55.42%
    Less:
    Fixed factory overhead (280,000) (30.38%)
    Fixed marketing and administrative expenses (130,500) (14.16%)
    Operating income $100,220 10.88%

    4. Units in ending inventory = Units, beginning inventory + Units produced – Units


    sold
    Units in ending inventory = 1,600 + 40,000 – 41,000
    Units in ending inventory = 600 units
    Using variable costing:
    Cost of ending inventory = 600 units x $9.50
    Cost of ending inventory = $5,700

    Pattison Products, Inc.


    Variable-Costing
    Income Statement for the Month of November

    Percent of sales
    Sales ($24 × 41,000) $984,000 100.00%
    Less:
    Variable cost of goods sold ($9.50 × 41,000) (389,500) (39.58%)
    Variable marketing expenses ($1.20 × 41,000) (49,200) (5.00%)
    Contribution margin $545,300 55.42%
    Less:
    Fixed factory overhead (280,000) (30.38%)
    Fixed marketing and administrative expenses (130,500) (14.16%)
    Operating income $134,800 13.70%

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