Chapter 21: Q-21-15 (page 1169)
How do service companies differ from manufacturing companies?
Answer
Service companies do not produce any product.
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Computing inventory balances
Zeng Company reports the following data:
Finished Goods Inventory:
Beginning balance, in units 300 Units
Produced 2,900
Units sold (1,600)
Ending balance, in units 1,600
Production Costs: Variable manufacturing costs per unit $ 57
Total fixed manufacturing costs 26,100
Calculate the product cost per unit and the total cost of the 1,600 units in ending inventory using absorption costing and variable costing.
When units produced exceed units sold, how does operating income differ between variable costing and absorption costing? Why?
Using absorption and variable costing
Meyer Company reports the following information for March:
Net Sales Revenue $ 45,300
Variable Cost of Goods Sold 12,500
Fixed Cost of Goods Sold 11,800
Variable Selling and Administrative Costs 14,000
Fixed Selling and Administrative Costs 5,400
Requirements:
Explain how increasing production can increase gross profit when using absorption costing.
Question: Preparing variable costing income statements, production exceeds sales
ReVitalAde produced 13,000 cases of powdered drink mix and sold 12,000 cases in April 2018. The sales price was \(29, variable costs were \)12 per case (\(9 manufacturing and \)3 selling and administrative), and total fixed costs were \(100,000 (\)91,000 manufacturing overhead and $9,000 selling and administrative). The company had no beginning Finished Goods Inventory.
Requirements:
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