Explore BrainMass

Explore BrainMass

    Variable costing and absorption costing

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

    Provide appropriate supporting analysis for your answer choice.

    Abbey Company, which has only one product, has provided the following data concerning its most recent month of operations:

    Selling price $129

    Units in beginning inventory 0
    Units produced 6,300
    Units sold 6,100
    Units in ending inventory 200

    Variable costs per unit:
    Direct materials $32
    Direct labor $50
    Variable manufacturing overhead $5
    Variable selling and administrative $11

    Fixed costs:
    Fixed manufacturing overhead $88,200
    Fixed selling and administrative $97,600

    1. What is the unit product cost for the month under variable costing?
    A) $87
    B) $101
    C) $112
    D) $98

    2. What is the unit product cost for the month under absorption costing?
    A) $101
    B) $98
    C) $87
    D) $112

    3. The total gross margin for the month under the absorption costing approach is:
    A) $189,100
    B) $6,100
    C) $170,800
    D) $191,000

    4. What is the total period cost for the month under the variable costing approach?
    A) $252,900
    B) $164,700
    C) $88,200
    D) $185,800

    5. What is the net operating income for the month under variable costing?
    A) $3,300
    B) $2,800
    C) ($14,100)
    D) $6,100

    © BrainMass Inc. brainmass.com June 3, 2020, 8:05 pm ad1c9bdddf
    https://brainmass.com/business/accounting/variable-costing-absorption-costing-122635

    Solution Summary

    The solution examines variable costing and absorption costing.

    $2.19

    ADVERTISEMENT