Question
Alabaster Co.had sales of $500,000 for April and $1,000,000 for May. Selling price per unit remained at $5 for each month. The company started April
Alabaster Co.had sales of $500,000 for April and $1,000,000 for May. Selling price per unit remained at $5 for each month. The company started April with no beginning inventory and then produced 200,000 units in April and 100,000 units in May. Variable manufacturing cost per unit decreased from $1.10 in Aprilto $1.00 in May. This was due to a change in labour rates. Direct materials costs remained constant at $0.45 per unit. Fixed manufacturing costs remained the same for both months at $450,000. There are no non-manufacturing costs. The company uses the firstin, firstout (FIFO)method for costing inventory.
1.What is the variable cost operating income for May?
a)$(60,000)
b)$330,000
c)$340,000
d)$450,000
2.What is the throughput costingoperating income for May?
a)$115,000
b)$340,000
c)$395,000
d)$405,000
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