Question

Information from Jacob Perez Company’s records is available as follows for the year ended December 31, 2014:
Net sales ......... $1,600,000
Cost of goods manufactured:
Variable ......... $ 800,000
Fixed ............ 352,000
Operating expenses:
Variable ........... $ 78,000
Fixed ............. 150,000
Units manufactured ....... 80,000
Units sold ........... 55,000
Finished goods inventory, 1/1/2014 . None

No work-in-process inventories existed at the beginning or end of 2014.

Required:
1. What would be Perez’s finished goods inventory and cost of goods sold under the variable (direct) costing method at December 31, 2014?
2. Under the absorption costing method, what would Perez’s operating income be?
3. Calculate Jacob Perez Company’s cost of goods sold and ending inventory under absorption costing.



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  • CreatedSeptember 10, 2014
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