Tiger Mountain Gelato incurs the following costs for its premium ice cream in May 2018: Direct materials
Question:
Tiger Mountain Gelato incurs the following costs for its premium ice cream in May 2018:
Direct materials cost per pint....................................... $ 2.50 per pint
Direct labor cost per pint.................................................. 0.75 per pint
Variable manufacturing overhead cost per pint ...........0.25 per pint
Fixed manufacturing overhead costs ...........................6,000 per month
Total fixed selling and administrative costs................. 5,000 per month
Sales price per pint ............................................................8.00 per pint
Pints of gelato produced ...............................................12,000 pints
Pints of gelato sold......................................................... 11,500 pints
There were no beginning inventories, so Tiger Mountain Gelato has 500 pints in ending Finished Goods Inventory (12,000 pints produced less 11,500 pints sold).
Requirements
1. Calculate Tiger Mountain Gelato’s product cost per pint under absorption costing and variable costing.
2. Calculate the balance in Finished Goods Inventory on May 31, 2018, using absorption costing and variable costing.
3. Prepare income statements in good form for Tiger Mountain Gelato for May 2018 using absorption costing and variable costing.
4. Reconcile the differences between operating incomes and Finished Goods Inventory balances between the two costing methods.
Step by Step Answer:
Horngrens Financial And Managerial Accounting
ISBN: 9780134486833
6th Edition
Authors: Tracie Miller Nobles, Brenda Mattison, Ella Mae Matsumura