Arabica's planned production for the year that just ended was 10,000 units. Actual production totaled 10,000...

 

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Arabica's planned production for the year that just ended was 10,000 units. Actual production totaled 10,000 units, and the company sold 11,000 units of its manufacturing output at $10 per unit. The following costs were incurred: Manufacturing costs: Direct material used Direct labor Variable manufacturing overhead Fixed manufacturing overhead Selling and administrative: Variable Selling and administrative Fixed Selling and administrative Finished-goods inventory, January 1 $ 100,000 120,000 80,000 60,000 60,000 180,000 2000 Required: A. Calculate the cost per unit produced using variable costing. (20 Marks) B. Calculate the cost per unit produced using absorption costing. (20 Marks) C. What would be the company's finished-goods inventory cost on December 31 under the variable-costing method? (20 Marks) D. Which costing methods, absorption or variable costing, would show a higher operating income for the year? By what amount. (20 Marks) Arabica's planned production for the year that just ended was 10,000 units. Actual production totaled 10,000 units, and the company sold 11,000 units of its manufacturing output at $10 per unit. The following costs were incurred: Manufacturing costs: Direct material used Direct labor Variable manufacturing overhead Fixed manufacturing overhead Selling and administrative: Variable Selling and administrative Fixed Selling and administrative Finished-goods inventory, January 1 $ 100,000 120,000 80,000 60,000 60,000 180,000 2000 Required: A. Calculate the cost per unit produced using variable costing. (20 Marks) B. Calculate the cost per unit produced using absorption costing. (20 Marks) C. What would be the company's finished-goods inventory cost on December 31 under the variable-costing method? (20 Marks) D. Which costing methods, absorption or variable costing, would show a higher operating income for the year? By what amount. (20 Marks)

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Direct materials used Direct labor Vari... View the full answer