Question: Sarah Stoner sells handmade jewelry that she designs herself The

Sarah Stoner sells handmade jewelry that she designs herself. The items aren’t expensive, and she has a loyal following in her town and the surrounding area. Sarah incurred the following unit costs to produce 60,000 items.
Direct materials........... $3.00
Direct labor ........... $1.75
Variable overhead........... $0.75
Fixed overhead........... $4.25

Sarah began the year with no inventory. During the year she sold 45,000 items for $15 each, incurring $0.50 in selling costs per item plus $5,000 in advertising and other selling expenses.

Required
a. Under variable costing, what is Sarah’s operating income?
b. Under absorption costing, what is Sarah’s ending Finished Goods Inventory balance?


View Solution:


Sale on SolutionInn
Sales7
Views262
Comments
  • CreatedFebruary 21, 2014
  • Files Included
Post your question
5000