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    M. J. Lighting

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    M. J. Lighting uses direct costing for all internal reporting. For the current year, finished goods inventory, under variable costing was as follows
    (M.J. does not have any work inprocess):

    Beginning of year End of year
    Finished Goods $7,000 $4,500

    The inventory, for external reporting purposes, would include $1,100 in fixed
    manufacturing overhead for the beginning and $950 for the ending inventory. Total variable manufacturing costs during the year were $32,500 and fixed manufacturing costs were $10,500.

    9. What is the cost of goods sold for the current year under direct (variable) costing?
    a. $33,900
    b. $35,000
    c. $36,500
    d. $40,300
    e. $40,500

    10. Assuming that M. J. used absorption costing for both internal and external reporting, what would cost of goods sold be for the year?
    a. $35,150
    b. $40,650
    c. $45,350
    d. $45,500
    e. $45,650

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    Solution Preview

    M. J. Lighting uses direct costing for all internal reporting. For the current year, finished goods inventory, under variable costing was as follows
    (M.J. does not have any work in process):

    Beginning of year End of year
    Finished Goods $7,000 ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what is cost of goods sold under direct (variable), & absorption costing.

    $2.19

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