Spicer Company produces and sells wooden pallets that are used for moving and stacking materials. The operating

Question:

Spicer Company produces and sells wooden pallets that are used for moving and stacking materials. The operating costs for the past year were as follows:
Variable costs per unit:
Direct materials ......$ 2.45
Direct labor .........2.10
Variable overhead ........0.25
Variable selling .........0.30
Fixed costs per year:
Fixed overhead ......180,000
Selling and administrative ...56,000
During the year, Spicer produced 200,000 wooden pallets and sold 208,000 at $9 each. Spicer had 11,300 pallets in beginning finished goods inventory; costs have not changed from last year to this year. An actual cost system is used for product costing.

Required:
1. What is the per-unit inventory cost that will be reported on Spicer’s balance sheet at the end of the year? How many units are in ending inventory? What is the total cost of ending inventory?
2. Calculate absorption-costing income.
3. What would the per-unit inventory cost be under variable costing? Does this differ from the unit cost computed in Requirement 1? Why?
4. Calculate variable-costing income.
5. Suppose that Spicer Company had sold 196,700 pallets during the year. What would absorption-costing income have been? Variable-costing income?

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 =...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: