• a.  How much did the client capitalize into inventory on a per-unit basis?
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• b.  How many units did the client produce last year? 
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• c.   How much income would it have reported last year?

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Sandra is studying the working papers from her client's 2025 income statement because her manager wants her to reconstruct that same income statement without the benefit of first seeing the finished product. She knows the client uses standard costing within its accounting system, but she has to figure out which inventory costing method it uses. The working paper shows the following details. No other variances were reported, and the prior year per-unit costs were the same as the 2025 per-unit costs. Gross margin Sales volume Budgeted production Beginning FG Inventory Ending FG Inventory Fixed-MOH volume variance (unfavorable) Operating income Sales $5,011 200 units 220 units 27 units 38 units $189 $610 $15,600 Sandra is studying the working papers from her client's 2025 income statement because her manager wants her to reconstruct that same income statement without the benefit of first seeing the finished product. She knows the client uses standard costing within its accounting system, but she has to figure out which inventory costing method it uses. The working paper shows the following details. No other variances were reported, and the prior year per-unit costs were the same as the 2025 per-unit costs. Gross margin Sales volume Budgeted production Beginning FG Inventory Ending FG Inventory Fixed-MOH volume variance (unfavorable) Operating income Sales $5,011 200 units 220 units 27 units 38 units $189 $610 $15,600

Answer rating: 100% (QA)

To find the perunit capitalized cost you can use the following formula PerUnit Capitalized Cost ... View the full answer