During its second year of operations, Grilling Raine Computing, an entity that manufactures and sells laptop stands,
Question:
During its second year of operations, Grilling Raine Computing, an entity that manufactures and sells laptop stands, produced 275 000 units and sold 250 000 units at $60 per unit. The beginning inventory balance was 5000 units. No changes in fixed or variable costs occurred in the second year. The managers expected to sell 220 000 units, the same volume of manufacturing as last year.
They set that amount as the normal capacity for allocating fixed overhead costs during the second year. For simplicity, assume that the budgeted fixed manufacturing overhead cost equals the actual cost this period. Also assume that the entity uses the first-in, first-out (FIFO) cost flow assumption.
The following costs were incurred during the year:
Variable cost per unit:
Direct materials .............................................. $ 15.00
Direct labour .............................................. 10.00
Manufacturing overhead .............................................. 12.50
Selling and administrative .............................................. 2.50
Total fixed costs:
Manufacturing overhead.............................................. $2 200 000
Selling and administrative .............................................. 1 375 000
Required
Prepare a statement of profit or loss using throughput costing.
Step by Step Answer:
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey