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Variable and Absorption Costing

Scott Manufacturing makes only one product with total unit manufacturing costs of $$54,$ of which $$36$ is variable. No units were on hand at the beginning of Year $1.$ During Year $1$ and Year $2,$ the only product manufactured was sold for $$84$ per unit, and the cost structure did not change. Scott uses the first$-$in$,$ first$-$out inventory method and has the following production and sales for Year $1$ and Year $2$:

$\backslash$table$[[,$Units Manufactured,Units Sold$],[$Year $1,120,000,90,000],[$Year $2,120,000,130,000]]$

a$.$ Prepare gross profit computations for Year $1$ and Year $2$ using absorption costing.

Do not use negative signs with your answers.

$\backslash$table$[[\backslash$table$[[$Absorption Costing$]]],[$Sales$,$$$,7560000,$$$,10920000],[$Cost of goods sold:,,,,$],[$Beginning inventory,,$0,,],[$Production$,,6480000,,6480000],[$Goods available,,$6480000,,],[$Less: Ending inventory,,$1620000,,1080000],[$Cost of goods sold,,$4860000,,],[$Gross profit,$$,2700000,$$$,]]$

b$.$ Prepare gross profit computations for Year $1$ and Year $2$ using variable costing.

Do not use negative signs with your answers.

Variable and Absorption Costing

Scott Manufacturing makes only one product with total unit manufacturing costs of $$54,$ of which $$36$ is variable. No units were on hand at the beginning of Year $1.$ During Year $1$ and Year $2,$ the only product manufactured was sold for $$84$ per unit, and the cost structure did not change. Scott uses the first$-$in$,$ first$-$out inventory method and has the following production and sales for Year $1$ and Year $2$:

$\backslash$table$[[$Units Manufactured,Units Sold$],[$Year $1,120,000,90,000],[$Year $2,120,000,130,000]]$

a$.$ Prepare gross profit computations for Year $1$ and Year $2$ using.absorption costing.

Do not use negative signs with your answers.

$\backslash$table$[[$Absorption Costing$],[,,$Year $1,$Year $2],[$Sales$,$$$,7560000,$$$10920000$