Question

Asian Iron began last year with no inventories. During the year, 10,500 units were produced, of which 9,400 were sold. Data concerning last year’s operations appear here (in New Taiwan dollars, NT$):
Revenue .................. NT$32,900
Variable direct materials costs ....... 2,300
Variable direct labor costs ......... 3,300
Variable manufacturing overhead ....... 2,800
Variable selling ............... 940
Fixed manufacturing overhead ........ 8,250
Fixed selling and administrative costs ..... 14,560
Variable manufacturing costs reflect the variable cost to produce the number of units manufactured. However, variable selling costs are not incurred until the units are sold, so they reflect the cost for the number of units sold. Asian Iron allocates actual manufacturing overhead costs to inventory based on actual units produced.

REQUIRED
A. Calculate the value of ending inventory on the balance sheet under the following:
1. Variable costing
2. Absorption costing
3. Throughput costing
B. Calculate operating income under each of the following methods:
1. Variable costing
2. Absorption costing
3. Throughput costing
C. Estimate the variable costing operating income if 12,110 units were produced and sold in a year.



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  • CreatedJanuary 26, 2015
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