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Absorption and Variable Costing
Home Base, Inc. reports the following production cost information:
Beginning Inventory 10, 000 units Units produced 97,000 units Units sold 92,000 units Direct Labor $17 per unit Direct Materials $34 per unit Variable Overhead $2,522,000 in total Fixed Overhead $ 1,940,000 in total Operating Costs $ 2,000,000 in total Assume that production costs have remained the same since the previous period and all units are sold for $137.00 per unit. A. Compute production cost per unit under variable costing B. Compute production cost per unit under absorption costing C. Determine net income using variable costing D. Determine net income using absorption costing A. Variable Costing Units produced 97,000 units Unit Cost = DM DL VOH = $34 $17 $26 VOH= $2,522,000/ 97000 UNITS = $26 = $77 B. Absorption Costing Unit = DM DL VOH FOH = $34 $17 $26 $20 = $97 FOH= $1,940,000/ 97,000 UNITS = $20 C. AND D I am kind of lost? What do I do with the beginning inventory also VOH= $2,522,000/ 97,000 UNITS = $26 |
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