Reference no: EM133107637

Question - For 2021, Hambrey Inc. had the following data associated with one of the product lines it manufactures:

Selling price per unit $800

Variable costs:

Direct materials per unit $85

Direct labour cost per unit $70

Variable manufacturing overhead per unit $55

Variable selling and administrative expenses (per unit sold) $80

Fixed costs:

Fixed production costs $1,100,000

Fixed selling and administrative expenses $730,000

Beginning inventory 0

Units produced 50,000

Units sold 43,000

Required -

(A) Compute the product cost per unit using the Variable Costing method.

(B) Determine the number of units in Finished Goods ending inventory and compute the value of the ending Finished Goods inventory using the Variable Costing method.

(C) What is the value of the COGS using the Variable Costing method?

(D) What is the net income using the Variable Costing method?

(E) Compute the value of the ending Finished Goods inventory using the Absorption Costing method.

(F) What is the value of the COGS using the Absorption Costing method?

(G) What is the net income using the Absorption Costing method?

(H) Why does the net income differ between the two methods? Be as specific as possible when answering this question to demonstrate your understanding of this topic.