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ACCT 3313 Cost Accounting Under absorption costing University of Oklahoma

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University of Oklahoma

ACCT 3313 Cost Accounting Under absorption costing University of Oklahoma

Chapter 6 Homework
1. Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $850. Selected data for the company’s operations last year
1. Assume that the company uses absorption costing. Compute the unit product cost for one gamelan. a. Absorption: Unit Product Cost = DL + DM + Var. MOH + Fixed MOH i. $700 2. Assume that the company uses variable costing. Compute the unit product cost for one gamelan. a. Variable: Unit Product Cost + DL + DM + Var. MOH i. $460
2. Ida Sidha Karya Company is a family-owned company located in the village of Gianyar on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $850. Selected data for the company’s operations last year
The absorption costing income statement prepared by the company’s accountant for last year appears below:
1. Under absorption costing, how much fixed manufacturing overhead cost is included in the company’s inventory at the end of last year? a. = Fixed Overhead rate X Units sold = $6,000 2. Prepare an income statement for last year using variable costing.
3 – 4 REQUIRED INFORMATION
Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data:
The company’s fixed manufacturing overhead per unit was constant at $560 for all three years.
1. Calculate each year’s absorption costing net operating income. (Enter any losses or deductions as a negative value.)
2. Assume in Year 4 that the company’s variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012,400. a. Did inventories increase or decrease during Year 4? i. Increase b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?
5. Royal Lawncare Company produces and sells two packaged products— Weedban and Greengrow. Revenue and cost information relating to the products follow:
Common fixed expenses in the company total $33,000 annually. Last year the company produced and sold 15,000 units of Weedban and 28,000 units of Greengrow.
Required: Prepare a contribution format income statement segmented by product lines.

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ACCT 3313 Cost Accounting Under absorption costing University of Oklahoma

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