Solution-Compute the number of units in the ending inventory

Compute the number of units in the ending inventory

Reference no: EM13334546

Direct and absorption costing

The information that follows pertains to Consumer Products for the year ended December 31, 20X6.

Inventory, 1/1/X6	24,000 units
Units manufactured	80,000
Units sold	82,000
Inventory, 12/31/X6	? units
Manufacturing costs:
Direct materials	$3 per unit
Direct labor	$5 per unit
Variable factory overhead	$9 per unit
Fixed factory overhead	$280,000
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, 20X6, by using direct costing.

d. Prepare an income statement for the year ended December 31, 20X6, by using absorption costing.

Reference no: EM13334546

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Compute the number of units in the ending inventory

Reference no: EM13334546

Reference no: EM13334546

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