Reference no: EM132620255

Penny Worth Manufacturing produces snow shovels. The selling price per snow shovel is $27.00. There is no beginning inventory.

Costs involved in production are:

Direct material $4.00

Direct labor 4.00

Variable manufacturing overhead 2.00

Total variable manufacturing costs per unit $10.00

Fixed manufacturing overhead per year $179,900

In addition, the company has fixed selling and administrative costs of $154,500 per year.

During the year, Penny Worth produces 51,400 snow shovels and sells 45,930 snow shovels.

Question 1: What is the value of ending inventory using full costing?

Question 2: What is the value of ending inventory using variable costing?

Question 3: Calculate the difference in full costing net income and variable costing net income without preparing either income statement.

Question 4: What is cost of goods sold using full costing?

Question 5: What is cost of goods sold using variable costing?

Question 6: What is net income using full costing?

Question 7: What is net income using variable costing?

Question 8: How much fixed manufacturing overhead is in ending inventory under full costing?

The amount of fixed manufacturing overhead in ending inventory under full costing is greater than/less than/equal to the difference in net income between full costing and variable costing