1)
Biff Enterprises, Inc. reports the following information:
|
|
2009 |
2010 |
2011 |
|
|
|
|
|
|
Units sold |
20,000 |
20,000 |
20,000 |
|
Units produced |
20,000 |
24,000 |
16,000 |
|
Fixed production costs |
$1,200,000 |
$1,200,000 |
$1,200,000 |
|
Variable production costs per unit |
$ 200 |
$ 200 |
$ 200 |
|
Selling price per unit |
$ 400 |
$ 400 |
$ 400 |
|
Fixed selling and administrative expenses |
$ 400,000 |
$ 400,000 |
$ 400,000 |
Calculate the value of the ending inventory using both absorption costing and variable costing.
2)
Gigantic Company reports the following information for 2011:
|
Beginning inventory |
0 |
|
|
Units produced |
40,000 |
|
|
Units sold |
38,000 |
|
|
Ending inventory |
2,000 |
|
|
|
|
|
|
Variable costs per unit: |
|
|
|
Manufacturing: |
|
|
|
Direct materials |
$100 |
|
|
Direct labor |
$ 160 |
|
|
Manufacturing overhead |
$ 40 |
|
|
Selling/administrative |
$ 10 |
|
|
Total variable costs per unit |
$ 310 |
|
|
|
|
|
|
Fixed costs: |
|
|
|
Manufacturing overhead |
|
$700,000 |
|
Selling and administrative |
|
$200,000 |
|
Total fixed costs |
|
$900,000 |
Gigantic Company sells its product for $820 per unit.
Prepare an income statement using absorption costing.
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