Pittsburgh Pillow Companys planned production for the year just ended was 10,000 units. This produc- Absorption, Variable,
Question:
Pittsburgh Pillow Company’s planned production for the year just ended was 10,000 units. This produc-
Absorption, Variable, and tion level was achieved, but it sold only 9,000 units. Other data follow:
Throughput Costing (LO 6,7,8) SASS TOVEMUCL ai srara stuc nee Raeweet ieee erenarera $ 135,000 DirechimatentaluSed) 2. <4 40: ssn eee meena ah eeu 40,000 Direclabontne Uhre cme cue tata rae nic ae een 20,000 Fixed manufacturing overhead ................... 25,000 Variable manufacturing overhead ................. 12,000 Fixed selling and administrative expenses .......... 30,000 Variable selling and administrative expenses ........ 4,500 Finished-goods inventory, January 1.=............. None There were no work-in-process inventories at the beginning or end of the year.
a. What would be Pittsburgh Pillow Company’s finished-goods inventory cost on December 31 under the variable-costing method?
b. Which costing method, absorption or variable costing, would show a higher operating income for the year? By what amount?
ce. Suppose that Pittsburgh Pillow Company uses throughput costing, and the cost of direct material is its only unit-level cost. What would be the company’s finished-goods inventory on December 31?
Step by Step Answer:
Cost Management Strategies For Business Decisions
ISBN: 12
4th Edition
Authors: Ronald Hilton, Michael Maher, Frank Selto