Langdon Company produced 9,000 units during the past year, but only 8,200 of the units were sold.
Question:
Langdon Company produced 9,000 units during the past year, but only 8,200 of the units were sold. The following additional information is also available.
Direct materials used .......... $79,000
Direct labor incurred ........... $30,000
Variable manufacturing overhead ..... $21,500
Fixed manufacturing overhead ....... $45,000
Fixed selling and administrative expenses .. $70,000
Variable selling and administrative expenses . $10,000
There was no work in process inventory at the beginning of the year, nor did Langdon have any beginning finished goods inventory.
Instructions
(a) What would be Langdon Company’s finished goods inventory cost on December 31 under variable costing?
(b) Which costing method, absorption or variable costing, would show a higher net income for the year? By what amount?
Step by Step Answer:
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso