Purchase Solution

# Absorption / variable costing

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Exercise E5: 11-18 General Information
Summit Manufacturing, Inc. produces snow shovels. The selling price per snow shovel is \$25

Costs involved in production are:
Direct materials \$4.00
Direct labor \$3.00
Variable manufacturing overhead \$2.00
Total variable manufacturing costs per unit \$9.00

Fixed manufacturing overhead per year \$168,000
"In addition, the company has fixed selling and
administrative costs per year:" \$152,000

Exercise E5-11 During the year, Summit produces 42,000 snow shovels and sells
38,500 snow shovels. What is the value of ending inventory using full costing?

Fixed Manufacturing Overhead Amount
Title Number
Fixed Manufacturing Overhead per unit Formula

Direct Materials per unit Amount
Title Amount
Title Amount
Title Amount
Cost per unit Formula

Shovels produced Number
Title Number
Title Formula
X ??? Amount
Value of ending inventory using full costing: Formula

Exercise E5-12 During the year, Summit produces 42,000 snow shovels and sells
38,500 snow shovels. What is the value of ending inventory using variable costing?

Direct Materials per unit Amount
Title Amount
Title Amount
Cost per unit Formula

Shovels produced Number
Title Number
Title Formula
X ??? Amount
Value of ending inventory under variable costing: Formula

Exercise E5-13 During the year, Summit produces 42,000 snow shovels and sells
38,500 snow shovels. Calculate the difference in full costing net income and variable costing net income
without preparing either income statement.

Shovels produced Number
Title Number
Title Formula
X ??? Amount
Difference in net income: Formula

Exercise E5-14 During the year, Summit produces 42,000 snow shovels and sells
38,500 snow shovels. What is the cost of goods sold using full costing?

Title Amount
Divided by ??? Number
Fixed Manufacturing Overhead per unit Formula

Direct Materials per unit Amount
Title Amount
Title Amount
Title Amount
Cost per unit Formula

Title Number
X ??? Amount
Cost of goods sold using full costing: Formula

Exercise E5-15 During the year, Summit produces 42,000 snow shovels and sells
38,500 snow shovels. What is the variable cost of goods sold?

Title Amount
Title Amount
Title Amount
Cost per unit Formula

Title Number
Title Amount
Variable cost of goods sold: Formula

Exercise E5-16 During the year, Summit produces 42,000 snow shovels and sells
38,500 snow shovels. What is net income using full costing?
The following information relates to Porter Manufacturing for fiscal 2008, the company's
first year of operation:

Selling price per unit
Direct material per unit
Direct labor per unit
Variable manufacturing overhead per unit
Variable selling cost per dollar of sales
Annual fixed manufacturing overhead
Annual fixed selling expense
Annual fixed administrative expense
Units produced
Units sold

Required
a. Prepare an income statement using full costing.

##### Solution Summary

The solution explains two questions relating to absorption and variable costing

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