Question

The accounting records for Moss Manufacturing Company included the following cost information relating to its first year of operations: Direct materials Direct labor Fixed manufacturing overhead Variable manufacturing overhead $ 23,500 $ 53,000 $ 37,000 $ 23,000 Assume the company produced 10,000 units of inventory and sold 7300 of these units for $126,290. What amount of finished goods will be reported on the balance sheet at the end of the year under variable costing? $58,865 $26,865 $62,865 None of these answers are correct.

Answer 1

a	Income Statement under variable costing
			Working	Amount $
	Opening Inventory	a		0
	Unit produced	b		10000
	Unit Sold	c		7300
	Closing Inventory	d=a+b-c		2700
	Sales	e		$          1,26,290
	Cost of good sold
	Opening Inventory	f
	Direct material	g	$          23,500.00
	Direct Labour	h	$          53,000.00
	Variable manufacturing OH	i	$          23,000.00
	Cost of good manufactured	J=g+h+i	$          99,500.00
	Less : Closing Inventory	k=j/b*d	$          26,865.00
	Less: Cost of good sold	l=f+j-k		$             72,635
	Manufacturing Margin	m=e-l		$             53,655
	Variable Selling & Admin	n		$                      -
	Contribution Margin	o=m-n		$             53,655
	Less : Fixed expenses
	Fixed Manufacturing OH Cost	p		$        37,000.00
	Fixed marketing cost	q		$                      -
	Net Operating Income/(loss)	r=o-p-q		$             16,655

$26,865 will be reported as finished goods.