Explore BrainMass

Explore BrainMass

    Chan Manufacturing Company

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Variable and Absorption Costing
    Chan Manufacturing Company data for 20X7 follow:

    Sales: 12,000 units at $17 each
    Actual production 15,000 units
    Expected volume of production 18,000 units
    Manufacturing costs incurred
    Variable $120,000
    Fixed 63,000
    Nonmanufacturing costs incurred
    Variable $ 24,000
    Fixed 18,000

    1. Determine operating income for 20X7, assuming the firm uses the variable-costing approach to
    product costing. (Do not prepare a statement.)
    2. Assume that there is no January 1, 20X7, inventory; no variances are allocated to inventory; and
    the firm uses a "full absorption" approach to product costing. Compute (a) the cost assigned to
    December 31, 20X7, inventory; and (b) operating income for the year ended December 31, 20X7.
    (Do not prepare a statement.)

    © BrainMass Inc. brainmass.com June 3, 2020, 10:51 pm ad1c9bdddf
    https://brainmass.com/business/accounting/chan-manufacturing-company-252616

    Solution Preview

    Variable and Absorption Costing
    Variable and Absorption Costing
    Chan Manufacturing Company data for 20X7 follow:

    Sales: 12,000 units at $17 each
    Actual production 15,000 units
    Expected volume of production 18,000 units
    Manufacturing costs incurred
    Variable $120,000
    Fixed 63,000
    Nonmanufacturing costs incurred
    Variable $ 24,000
    Fixed ...

    Solution Summary

    This solution is comprised of a detailed explanation to determine operating income for 20X7, assuming the firm uses the variable-costing approach to product costing.

    $2.19

    ADVERTISEMENT