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# Full costing and variable costing

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Company A produced 80,000 units and sold 75,000 units at a price of \$20 per unit.

Calculate net income using full costing and calculate net income using variable costing.

https://brainmass.com/economics/labour-economics/full-costing-and-variable-costing-101912

#### Solution Preview

Company A produced 80,000 units and sold 75,000 units at a price of \$20 per unit.

Calculate net income using full costing and calculate net income using variable costing.

The basic difference between absorption (full costing) and variable costing is the treatment of fixed manufacturing overhead. Absorption costing treats fixed overhead as a product cost while variable costing treats fixed overhead as a period cost.

Selling and administrative expenses are considered ...

#### Solution Summary

Calculates net income using full costing and variable costing.

\$2.19

## Summit Manufacturing analysis of variable costing; Porter Manufacturing cost methods.

See attached Excel file.

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
Total variable manufacturing costs per unit \$9.00

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

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?

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