Altoona Valve Company’s planned production for the year just ended was 18,800 units. This production level...
Altoona Valve Company’s planned production for the year just ended was 18,800 units. This production level was achieved, and 21,900 units were sold. Other data follow:
| Direct material used | $ | 580,920 | |
| Direct labor incurred | 278,240 | ||
| Fixed manufacturing overhead | 407,960 | ||
| Variable manufacturing overhead | 176,720 | ||
| Fixed selling and administrative expenses | 323,360 | ||
| Variable selling and administrative expenses | 113,740 | ||
| Finished-goods inventory, January 1 | 4,000 | units | |
|
The cost per unit remained the same in the current year as in the previous year. There were no work-in-process inventories at the beginning or end of the year. |
| Required: |
| 1. |
What would be Altoona Valve Company’s finished-goods inventory cost on December 31 under the variable-costing method? (Do not round your intermediate calculations.) |
||
|
Homework Answers
first let us know the units in ending inventory:
opening inventory + units produced - units sold
=>4000+18,800-21,900
=>900 units.
1st requirement:
finished goods inventory cost under variable costing method:=$60,660.
| direct materials | 580,920 |
| direct labor | 278,240 |
| variable manufacturing overhead | 176,720 |
| total manufacturing cost for 18,800 units | 1,035,880 |
| inventory cost of 900 units (1267120/18800*900 units) | 49,590 |
2nd requirement:
2a. variable costing.
(since sale units are more than production units, variable costing will have a higher net income)..
2b.$67,270.
(amount = 407,960 fixed manufacturing cost / 18800 units* (4000 units opening stock - 900 units closing stock)
=>$67,270.
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