Reference no: EM133125254

Question 1 - Variable and Absorption Costing - Scott Manufacturing makes only one product with total unit manufacturing costs of $56, of which $38 is variable. No units were on hand at the beginning of 2015. During 2015 and 2016, the only product manufactured was sold for $87 per unit, and the cost structure did not change. Scott uses the first-in, first-out inventory method and has the following production and sales for 2015 and 2016

a. Prepare gross profit computations for 2015 and 2016 using absorption costing.

b. Prepare gross profit computations for 2015 and 2016 using variable costing.

Question 2 - Variable and Absorption Costing - Pyne Company produces a single product. The company has 65,000 units in its ending inventory. Pyne's variable production costs during the year were $10 per unit and fixed manufacturing overhead costs were applied at $25 per unit ( which was the same as last year). The company's net operating income is $140,000 higher under variable costing than it is under absorption costing; and the company uses FIFO and closes any over- or under-applied overhead directly to cost of goods sold. Given these facts, what was the number of units of product in beginning inventory?