Absorption Costing, Value of Ending Inventory, Operating Income

Pattison Products, Inc., began operations in October and manufactured 46,000 units during the month with the following unit costs:

Direct materials	$5.00
Direct labor	3.00
Variable overhead	1.50
Fixed overhead*	7.00
Variable marketing cost	1.20

^* Fixed overhead per unit = $322,000 / 46,000 units produced = $7

Total fixed factory overhead is $322,000 per month. During October, 44,100 units were sold at a price of $22.00, and fixed marketing and administrative expenses were $130,400.

Required:

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1. Calculate the cost of each unit using absorption costing. Round your final answer to the nearest cent. $fill in the blank 6e3faf05e06d04e_1 per unit

2. How many units remain in ending inventory? fill in the blank 6e3faf05e06d04e_2 units

What is the cost of ending inventory using absorption costing? $fill in the blank 6e3faf05e06d04e_3

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1. Absorption costing assigns all manufacturing costs (fixed and variable) to each unit produced.

2. Beginning inventory + Units Produced Units Sold = Ending inventory

Cost per unit x total units not sold = cost of ending inventory.

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3. Prepare an absorption-costing income statement for Pattison Products, Inc., for the month of October.

Pattison Products, Inc. Absorption-Costing Income Statement For the Month of October

Cost of goods soldFixed marketing and administrative expensesSalesVariable marketing expensesSales	$Sales
Less: Cost of goods soldLess: Fixed marketing and administrative expensesLess: SalesLess: Variable marketing expensesLess: Cost of goods sold	Less: Cost of goods sold
Gross profit	$fill in the blank 392dbefe2fec02e_5
Less:
Cost of goods soldFixed overheadSalesVariable marketing expensesVariable marketing expenses	Variable marketing expenses
Cost of goods soldFixed marketing and administrative expensesFixed overheadSalesFixed marketing and administrative expenses	Fixed marketing and administrative expenses
Operating income	$fill in the blank 392dbefe2fec02e_10

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3. Absorption costing assigns all manufacturing costs (fixed and variable) of products sold as COGS.

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4. What if November production was 46,000 units, costs were stable, and sales were 47,000 units? What is the cost of ending inventory? $fill in the blank 5fd9fdfcc030049_1

What is operating income for November? $fill in the blank 5fd9fdfcc030049_2