Question
Spring Company has the following information related to the manufacture and sale of garden tools for Year 1 and Year 2 of operations: Year 1
Spring Company has the following information related to the manufacture and sale of garden tools for Year 1 and Year 2 of operations:
Year 1 Year 2
Production units 28,000 22,000
Sales price per $66.00 $66.00
Units sold 20,000 27,000
Direct Materials per unit $12.0 $12.00
Direct Labor per unit $18.00 $18.00
Variable Manufacturing OH per unit $ 9.00 $ 9.00
Fixed Manufacturing OH costs $180,000 $180,000
Variable Selling & Admin costs per unit $ 6.00 $ 6.00
Fixed Selling & Admin costs $ 60,000 $ 60,000
There was no beginning inventory in Year 1.
Using Variable Costing, what is Operating Income for Year 1?
a. $732,000
b. $180,000
c. $132,000
d. $780,000
Hobbies Inc. has the following information related to the manufacture and sale of craft items for Year 1 and Year 2:
Year 1 Year 2
Production units 3,000 2,750
Sales price per unit $70.00 $70.00
Units sold 2,250 3,200
Direct Materials per unit $10.00 $10.00
Direct Labor per unit $ 6.00 $ 6.00
Variable Manufacturing OH per unit $ 3.00 $ 3.00
Fixed Manufacturing OH costs $ 55,000 $ 55,000
Variable Selling & Admin costs per unit $ 2.00 $ 2.00
Fixed Selling & Admin costs $ 20,000 $ 20,000
There was no beginning inventory in Year 1.
Using Variable Costing, what is the value of Ending Inventory in Year 2?
A.
$ 1,350
B.
$ 8,550
C.
$ 5,700
D.
$ 900
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