Williamson Inc. manufactures digital voice recorders. During 2019, total costs associated with manufacturing 52,000 of the new

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Williamson Inc. manufactures digital voice recorders. During 2019, total costs associated with manufacturing 52,000 of the new EZ 9900 model (introduced this year) were as follows:

Raw materials .................................................... $447,200

Direct labor ........................................................ $738,400

Variable manufacturing overhead .................... 187.200

Fixed manufacturing overhead ......................... 176.800


Required:

a. Calculate the cost per recorder under both variable costing and absorption costing.

b. If 6,800 of these recorders were in finished goods inventory at the end of 2019, by how much and in what direction (higher or lower) would 2019 cost of goods sold and operating income be different under variable costing than under absorption costing?

c. Express the digital voice recorder cost in a cost formula. What does this formula suggest the total cost of making an additional 825 recorders would be?

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Accounting What the Numbers Mean

ISBN: 978-1260565492

12th edition

Authors: David Marshall, Wayne McManus, Daniel Viele

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