under/over applied fixed overhead variable/absorption costing

Project Description:

1. dynamic designs, inc. has developed a new design to produce track shoes tht are used in cross-country races. the company’s shoe design is innovative in that the insole is made of a product that provides a greater cushion and adapts more easily to a runner’s foot. management estimates expected annual capacity to be 80,000 units; overhead is applied using expected annual capacity. the company’s cost accountant predicts the following current year activities and related costs:

standard unit variable manufacturing costs $140
variable unit selling expense $6
fixed manufacturing overhead $2,400,000
fixed selling and administrative expenses $164,000
selling price per unit $225
units of sales 70,000
units of production 81,000
units in beginning inventory 15,000

other than any possible under- or overapplied fixed overhead, management expects no variances from the previous manufacturing costs. under- or overapplied fixed overhead is to be written off to cost of goods sold.


1. determine the amount of under- or overapplied fixed overhead using (a) variable costing and (b) absorption costing:
2. prepare projected income statements using (a) variable costing and (b) absorption costing.
3. reconcile the incomes derived in part 2
Skills Required:
Project Stats:

Price Type: Negotiable

Total Proposals: 2
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