Information for a start-up firm that is introducing a new product follows. Production costs: Variable ........................... $40
Question:
Information for a start-up firm that is introducing a new product follows.
Production costs:
Variable ........................... $40 per unit
Fixed ..........................$10,000 per month
Selling and administration:
Variable .............................. $9 per unit
Fixed ..........................$25,000 per month
Selling price ..................... $89 per unit
Production volume ..... 1,000 units
Sales volume .................. 850 units
REQUIRED
A. Using the variable costing method: (1) calculate the cost of ending inventory and (2) prepare an income statement.
B. Using the absorption costing method (1) calculate the cost of ending inventory and (2) prepare an income statement.
C. Reconcile income under the two methods.
Ending InventoryThe 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 =...
Step by Step Answer:
Cost Management Measuring Monitoring and Motivating Performance
ISBN: 978-0470769423
2nd edition
Authors: Leslie G. Eldenburg, Susan K. Wolcott