Question
Below is an exerpt from the financial data from JasNav Inc. The company has adopted a standard costing system. The following data are for the
Below is an exerpt from the financial data from JasNav Inc. The company has adopted a standard costing system. The following data are for the year ended December 31, 20x3:
Inventory, Jan 1, 20x3 | 100,000 units |
Inventory, Dec 31, 20x3 | 35,000 units |
Sales | 350,000 units |
Selling price | $35.00 |
Variable manufacturing costs | 7.00 |
Variable selling costs | 1.50 |
Fixed manufacturing overhead | $1,710,000 |
Denominator-level direct labour hours | 7,500 |
Standard production rate | 40 units per direct labour hour |
Fixed operating expenses | $1,000,000 |
Required
Prepare income statements under variable and absorption costing for the year ended December 31, 20x3 and reconcile the two incomes. Assume that the budget costs were the same as the actual costs incurred.
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