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Absorption Costing, Value of Ending Inventory, Operating Income

Pattison Products, Inc., began operations in October and manufactured 49,000 units during the month with the following unit costs:

Direct materials	$6.00
Direct labor	4.00
Variable overhead	2.00
Fixed overhead*	8.00
Variable marketing cost	1.70

^* Fixed overhead per unit = $392,000 / 49,000 units produced = $8

Total fixed factory overhead is $392,000 per month. During October, 46,600 units were sold at a price of $28.00, and fixed marketing and administrative expenses were $131,400.

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 393ab0003048043_1 per unit

2. How many units remain in ending inventory? fill in the blank 393ab0003048043_2 units

What is the cost of ending inventory using absorption costing? $fill in the blank 393ab0003048043_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.

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 b41236051ffb057_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 b41236051ffb057_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 49,000 units, costs were stable, and sales were 50,000 units? What is the cost of ending inventory? $fill in the blank 20b82204b057f97_1

What is operating income for November? $fill in the blank 20b82204b057f97_2

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