Question

IThe following Information applies to the questions displayed below. Oak Mart, a producer of solid oak tables, reports the following data from its second year of business. Sales price per unit Units produced this year Units sold this year Units in beginning-year inventory Beginning inventory costs 320 per unit 15,000 units 118,000 units 3,000 units Variable (3,000 units x $135) Fixed (3,000 units x $80) $ 405,000 240,000 Total $ 645,000 Manufacturing costs this year Direct materials Direct labor Overhead costs this year 40 per unit 62 per unit Variable overhead Fixed overhead $3,220,000 $7400,000 Selling and adminstrative costs this year Variable Fixed $1,416,000 4,600,000

Oak Mart, a producer of solid oak tables, reports the following data from its second year of business.

  

Sales price per unit	$	320	per unit
Units produced this year		115,000	units
Units sold this year		118,000	units
Units in beginning-year inventory		3,000	units
Beginning inventory costs
Variable (3,000 units × $135)	$	405,000
Fixed (3,000 units × $80)		240,000
Total	$	645,000
Manufacturing costs this year
Direct materials	$	40	per unit
Direct labor	$	62	per unit
Overhead costs this year
Variable overhead	$	3,220,000
Fixed overhead	$	7,400,000
Selling and adminstrative costs this year
Variable	$	1,416,000
Fixed		4,600,000

Answer 1

	Variable costing income statement
	Sales						37760000
	less:Variable costs
	Beginning inventory
	variable costs.					405,000
	manufacturing cost of this year
	Direct materials					4600000
	Direct labor					7130000
	Variable overhead costs					3,220,000
	total variable costs available					15,355,000
	less:Ending finished goods inventory					0
	Variable cost of goods sold					15,355,000
	variable selling and administrative expense					1,416,000
	total variable costs						16,771,000
	contribution margin						20,989,000
	less:Fixed expenses
	Fixed selling and administration costs					4,600,000
	fixed overhead costs					7,400,000
	tota fixed expenses						12,000,000
	net income (loss)						8,989,000
	Absorption costing income statement
	Sales						37760000
	less:cost of goods sold
	Beginning inventory					645,000
	manufacturing cost of this year
	Direct materials					4600000
	Direct labor					7130000
	Variable overhead costs					3,220,000
	Fixed overhead costs					7,400,000
	less:ending inventory
	cost of goods sold						22,995,000
	Gross margin						14,765,000
	Selling general and administrative expense
	fixed selling and administrative cost					4,600,000
	variable selling and administrative cost					1,416,000
	tota fixed expense						6,016,000
	Net income (loss)						8,749,000
	net income under variable costing is higher than ni under absoprtion costing by							240,000
	number of units added to (subtracted from ) inventory							3,000
	fixed overhead cost per unit							80
	fixed cost added to(subtracted from) inventory							240,000