Flex Budgets and variances
13-45 VARIABLE AND ABSORPTION COSTING
CHAN MANUFACTURING COMPANY DATA FOR 20X7 FOLLOW:
Sales: 12,000 units at $17 each
Actual Production 15,000 Units
Expected volume of production 18,000 units
Manufacturing costs incurred
Variable $120,000
Fixed 63,000
Nonmanufacturing costs incurred
Variable $24,000
Fixed 18,000
1. Determine operating income for 20x7, assuming the firm uses the variable-costing approach to product costing (do not prepare a statement)
2. Assume that there is no January 1, 20x7, inventory; no cariances are allocated to inventory; and the firm uses a "Full Absorption" approach ro product costing.
Compute (a) the coast assigned to Dec. 31, 20x7, inventory; and (b) operating income for the year ended Dec 31, 20x7. ( Do not Prepare a statement).
