TroutPro Co. manufactures fishing equipment. During 2019, total costs associated with manufacturing 15,000 fly-cast fishing rods (a

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TroutPro Co. manufactures fishing equipment. During 2019, total costs associated with manufacturing 15,000 fly-cast fishing rods (a new product introduced this year) were as follows:


Raw materials ............................................................. $62.100

Direct labor ................................................................... 16.500

Variable manufacturing overhead ............................. 11,250

Fixed manufacturing overhead .................................. 18.000


Required:

a. Calculate the cost per fishing rod under both variable costing and absorption costing.

b. If 300 of these fishing rods were in finished goods inventory at the end of 2019, by how much and in what direction (higher or lower) would 2019 operating income be different under variable costing than under absorption costing?

c. Express the fishing rod cost in a cost formula. What does this formula suggest the total cost of making an additional 200 fishing rods would be?

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Related Book For  book-img-for-question

Accounting What the Numbers Mean

ISBN: 978-1260565492

12th edition

Authors: David Marshall, Wayne McManus, Daniel Viele

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