Answered step by step
Verified Expert Solution
Question
1 Approved Answer
George Fine Company produces shoes and wallets. Selected data for the past year follow: Shoes Wallets Production (units) 90,000 190,000 Sales (units) 80,000 200,000 Selling
George Fine Company produces shoes and wallets. Selected data for the past year follow:
Shoes Wallets
Production (units) 90,000 190,000
Sales (units) 80,000 200,000
Selling price 7 9
Direct labour hours 80,000 60,000
Manufacturing costs:
Direct Materials per unit 0.75 0.5
Direct Labour per unit 2.5 2.0
Variable overheads per unit 0.20 0.13
Fixed overhead:
Direct 70,000 70,000
Non-manufacturing costs:
Variable selling 30,000 60,000
Direct fixed selling 60,000 65,000
Budgeted fixed overhead for the year, 140,000, equalled the actual fixed overhead. Fixed overhead is assigned to products using a plantwide rate based on expected direct labour hours, which were 140,000. The company had 10,000 wallets in inventory at the beginning of the year. These wallets had the same unit cost as the wallets produced during the year.
Required:
a) Prepare an income statement using marginal costing.
b) Prepare an income statement using absorption costing.
c) Prepare a reconciliation statement between Absorption and Marginal costing profit figures calculated above.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started