Last year Fabre Company produced 20000 units and sold 18000 units at a price of $12. Costs for last year were as follows:
Direct Materials: $25000
Direct Labor: 35000
Variable factory overhead: 12000
Fixed Factory Overhead: 37000
Fixed Selling Expense: 7500
Variable Selling Expense: 9000
Fixed Administrative Expense: 15500
Fixed facotry overhead is applies based on expected production. Last year Fabre expected to produce 20000 units.
1) Assuming that begining inventory was zero what is the value of ending inventory under absorbtion costing?
2) Assuming begining inventory was zero what is the value of ending inventory under variable costing?
3) What is operatiing income for last year under absoption costing?
4) What is operating income for last year under variable costing?
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