During its first year of operations, Company produced 55,000 bags of dog biscuits based on a formula containing 10% chicken. Unit sales were 53,500 bags. Fixed overhead was applied at $0.50 per unit produced. Fixed overhead was underapplied by $10,000. This fixed overhead variance was closed to Cost of Goods Sold. The results of the years operations are as follows (on an absorptioncosting basis):

Sales (53,500 units @ $8.50) $454,750

Less: Cost of Goods Sold 170,500

Gross Margin $284,250

Less: Selling and Administrative (all fixed) 120,000

Operating Income $164,250

_____________________________________________________________________

1. Prepare a variable-costing income statement.

2. Prepare a throughput-costing income statement. Of the total variable cost for manufacturing direct material is 40%, direct labor is 10% and variable overhead is 50%.

_____________________________________________________________________________

QUESTIONS:

1. Give the cost of the firms ending inventory under absorption costing.

2. Give the cost of the firms ending inventory under variable costing.

3. Give the cost of the firms ending inventory under throughput costing.

4. What is the budgeted production?