Summit Manufacturing, Inc produces snow shovels. The selling price per snow shovel is $30.00

Cash Involved in production are

Direct material $5

Direct labor $4

Variable manufacturing overhead $3

Total Variable manufacturing cost per unit $12

Total manufacturing overhead per year $180,000

In addition, the company had fixed selling and administrative costs of $160,000 and sells 37,000 snow shovels.

1. During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.

Required

What is the value of ending inventory using full costing?

2. During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.

Required

What is the value of ending inventory using variable costing?

3. During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.

Required

Calculate the difference in full costing net income and variable costing net income preparing either income statement.

4. During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.

Required

What is cost goods sold using full costing?

5. During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.

Required

What is variable cost of goods sold?

6. During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.

Required

What is net income using full costing?

7. During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.

Required

What is net income variable costing?

8. During the year, Summit produces 40000 snow shovels and sells 37,000 snow shovels. How much fixed manufacturing overhead is in ending inventory under full costing?

Compare this amount to the difference in the net income calculated in exercise 5-13.