Reference no: EM131903665

Question - The information that follows pertains to XYZ Products for the year ended December 31, 20X8.

Inventory, 1/1/X8 26,000 units

Units manufactured 80,000

Units sold 83,000

Inventory, 12/31/X8 ? units

Manufacturing costs:

Direct materials $4 per unit

Direct labor $5 per unit

Variable factory overhead $9 per unit

Fixed factory overhead $300,000

Selling & administrative expenses:

Variable $2 per unit

Fixed $136,000

The unit selling price is $26. Assume that costs have been stable in recent years.

Instructions:

a. Compute the number of units in the ending inventory.

b. Calculate the cost of a unit assuming use of:

1. Direct costing.

2. Absorption costing.

c. Prepare an income statement for the year ended December 31, 20X8, by using direct costing.

d. Prepare an income statement for the year ended December 31, 20X8, by using absorption costing.