Q1.

Wool Creations Inc. manufactures wool sweaters. Costs incurred in making 9,000 sweaters in October included $22,500 of fixed manufacturing overhead. The total absorption cost per sweater was $11.60. a. Calculate the variable cost per sweater.

b. The ending inventory of sweaters was 1,600 units lower at the end of the month than at the beginning of the month. By how much and in what direction (higher or lower) would cost of goods sold for the month of October be different under variable costing than under absorption costing?

c. Express the sweater cost in a cost formula.

Q2.

The following table summarizes the beginning and ending inventories of Decatur Manufacturing Inc. for the month of October:

Sept.30 Oct.31

Raw Materials $ 33,500 $ 27,600

Work in Process $ 71,300 $ 64,800

Finished goods $ 47,200 $ 41,900

Raw materials purchased during the month of October totaled $123,900. Direct labor costs incurred totaled $312,200 for the month. Actual and applied manufacturing overhead costs for October totaled $188,400 and $192,300, respectively. Over/Under-applied overhead is written off to cost of goods sold at the end of the year in December.

a. Calculate the cost of goods manufactured for October.

b. Calculate the cost of goods sold for October.