Part 4 Variable Costing and Full Absorption Costing: Inventory Changes (20 points)

The companys Fixed Manufacturing Cost is $30,000 each month. In month 1, one unit is completed and one unit is half completed [thus $20,000 of Fixed Manufacturing Costs are included in each finished unit under Absorption Costing]. In month two, the second unit is completed and a third unit is started and completed. All three units are sold in Period 2. Disregard sales and variable costs when completing the companys income statements.

Period 1 Period 2

Beginning Work-in-process Inventory 0 a ________

Ending Work-in-process Inventory 10,000 b________

Beginning Finished-goods Inventory 0 c ________

Ending Finished-goods Inventory 20,000 d ________

Comparative Income Statements

Disregarding Sales Price and Variable Expenses

Period 1 Period 2 Total

Variable Costing Income (30,000) (30,000) (60,000)

Ending minus Beginning

Work-in-process inventory 10,000 e________ h________

Ending minus Beginning

Finished-goods Inventory 20,000 f________ i________

_________________________________

Absorption Costing Income 0 g________ j________

Note: ($60,000) represents two months of Fixed Manufacturing Costs.

Required

Fill in the appropriate spaces for lines a through j. Show some work.