Question
HK Masks Limited produces and sells masks. Fixed manufacturing overhead incurred for the above production process totaled $800,000. Net operating income under variable costing was
HK Masks Limited produces and sells masks. Fixed manufacturing overhead incurred for the above production process totaled $800,000. Net operating income under variable costing was three million dollars. The company did not have beginning inventory, units produced were 250,000 and units sold were 150,500.
Required:
a. Calculate the units of ending inventory (3 marks).
b. Compute the manufacturing overhead per unit absorbed in the ending inventory. (3 marks)
c. Use vertical 3 rows schedule to show the variances between the variable costing and absorption cost operating income figures. (11 marks)
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