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Advanced Company reports the following information for the current year. All beginning inventory amounts equaled $0 this year.

Units produced this year 25,000 units

Units sold this year 15,000 units

Direct materials $9 per unit

Direct labor $11 per unit

Variable overhead $75,000 in total

Fixed overhead $137,500 in total

93. Given Advanced Company's data, compute cost of finished goods in inventory under absorption costing.

A. $285,000

B. $712,500

C. $427,500

D. $230,000

E. $345,000

94. Given Advanced Company's data, compute cost of finished goods in inventory under variable costing.

A. $285,000

B. $712,500

C. $427,500

D. $230,000

E. $345,000

95. Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under absorption costing.

A. $55,000

B. $67,500

C. $80,500

D. $122,500

E. $205,000

96. Given Advanced Company's data, and the knowledge that the product is sold for $50 per unit and operating expenses are $200,000, compute the net income under variable costing.

A. $55,000

B. $67,500

C. $80,500

D. $122,500

E. $205,000

Respuesta :

Answer:

93. Option (C) is correct.

94. Option (E) is correct.

95. Option (D) is correct.

96. Option (B) is correct.

Explanation:

93.

Total unit cost:

= Direct materials + Direct labor + Variable manufacturing overhead + Fixed manufacturing overhead

= $9 + $11 + ($75,000 ÷ 25,000) + (137,500 ÷ 25,000)

= $9 + $11 + $3 + $5.5

= $28.50

cost of finished goods = 15000 × 28.5  

                                     = $427,500

94. unit cost = $23

cost of finished goods:

= 15,000 × $23

= $345,000

95.

Gross margin:

= Sales - cost of goods sold

= (15000 × 50) - 427,500

= $750,000 - 427,500

= $322,500

Net income under absorption costing:

= Gross margin - Operating expense

= $322,500 - $200,000

= $122,500

96.

Contribution margin:

= Sales - Cost of goods sold

= $750,000 - $345,000

= $405,000

Net income:

= Contribution margin - operating expense - fixed expense

= $405,000 - $200,000 - $137,500

= $67,500

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