This Website Has Been Moved to a New Link


Loading

Tenley Company produces and sells

Price: $3.50


P8-35 Variable-Costing and Absorption-Costing Income

Tenley Company produces and sells wooden pallets that are used
for moving and stacking materials. The operating costs for the past year were as follows: 

Variable costs per unit:
Direct materials ................3.35
Direct labor...................    1.78
Variable overhead ............1.60
Variable selling ................0.90
Fixed costs per year
Fixed overhead ................$180,000
Selling and administrative.    96,000

During the year, Tenley produced 300,000 wooden pallets and sold
306,500 at $9 each. Tenley had $11,300
pallets in beginning finished goods inventory; costs have not changed from last
year to this year. An actual costing system is used for product costing.

Instructions

1. What is the per-unit inventory cost that will be reported on Tenley's balance sheet at the end of the year?
How many units are in ending inventory? What is the total cost of ending inventory?
2. Calculate absorption-costing operating income.
3. Conceptual Connection: What would the per-unit inventory cost be under variable costing?
Does this differ from the unit cost computed in Requirement 1?
4. Calculate variable-costing operating income.
5. Suppose that Tenley Company had sold 296700 pallets during the year.
What would absorption-costing operating income have been? Variable-costing income?

No comments:

Post a Comment