Refer to the data in Exercise 61 for Shastri Bicycle. The absorption costing income statement prepared by
Question:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . R 4,000,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . 2,960,000
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . 1,040,000
Selling and administrative expense . . . . . . . . 560,000
Net operating income . . . . . . . . . . . . . . . . . . R 480,000
Required:
1. Determine how much of the ending inventory consists of fixed manufacturing overhead cost deferred in inventory to the next period.
2. Prepare an income statement for the year using variable costing. Explain the difference in net operating income between the two costing methods.
Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
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Related Book For
Managerial Accounting
ISBN: 978-0078111006
14th edition
Authors: Ray Garrison, Eric Noreen and Peter Brewer
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