202180927 – VISTA, MARK LESTER A.
OL33E21 – BS ACCOUNTANCY
OLCAE09 – FINANCIAL ACCOUNTING AND REPORTING
ACTIVITY 05
Fleet Corporation produces a single product. The company manufactured 700 units last year. The
ending inventory consisted of 100 units. There was no beginning inventory. Variable
manufacturing costs were $6.00 per unit and fixed manufacturing costs were $2.00 per unit.
What would be the change in the dollar amount of ending inventory if variable costing was used
instead of absorption costing?
Answer: B $200 decrease
= Change in Inventory x Fixed Manufacturing Cost per unit
= 100 X 2 = 200 decrease
Shun Corporation manufactures and sells a hand held calculator. The following information
relates to Shun's operations for last year:
Unit product cost under variable costing $5.20 per unit
Fixed manufacturing overhead cost for the year $260,000
Fixed selling and administrative cost for the year $180,000
Units (calculators) produced and sold 400,000
What is Shun's unit product cost under absorption costing for last year?
Answer: C $5.85
= $260,000 ÷ 400,000 units = $0.65 per unit
Unit product cost = $5.20 + $0.65 = $5.85
A manufacturing company that produces a single product has provided the following data
concerning its most recent month of operations:
Units in beginning inventory 0
Units produced 7,100
Units sold 7,000
Units in ending inventory 100
Variable costs per unit:
Direct materials $33
Direct labor $53
Variable manufacturing overhead $1
Variable selling and administrative $7
Fixed costs:
Fixed manufacturing overhead $170,400
Fixed selling and administrative $7,000
What is the unit product cost for the month under variable costing?
Answer: D $87
Unit product cost = Direct material + Direct Labor + Variable manufacturing overhead
= $33 + $53 + $1= $87
A manufacturing company that produces a single product has provided the following data
concerning its most recent month of operations:
Units in beginning inventory 0
Units produced 1,900
Units sold 1,700
Units in ending inventory 200
Variable costs per unit:
Direct materials $33
Direct labor $32
Variable manufacturing overhead $2
Variable selling and administrative $6
Fixed costs:
Fixed manufacturing overhead $72,200
Fixed selling and administrative $6,800
What is the unit product cost for the month under absorption costing?
Answer: B $105
Unit fixed manufacturing overhead = $72,000 ÷ 1,900 = $38
Unit product cost = Direct Materials + Direct Labor + VMO + FMO
= 33 + 32 + 2 + 38 = $105
A manufacturing company that produces a single product has provided the following data
concerning its most recent month of operations:
Selling price $79
Units in beginning inventory 0
Units produced 6,600
Units sold 6,300
Units in ending inventory 300
Variable costs per unit:
Direct materials $14
Direct labor $30
Variable manufacturing overhead $4
Variable selling and administrative $8
Fixed costs:
Fixed manufacturing overhead $46,200
Fixed selling and administrative $88,200
What is the total period cost for the month under the variable costing approach?
Answer: $184,800
Total Variable selling and administrative cost = $8 X 6,300 = $50,400
Period cost = total variable selling and administrative cost + FMO + Fixed selling and
administrative cost
= 50,400 + 46,200 + 88,200 = $184,800
A manufacturing company that produces a single product has provided the following data
concerning its most recent month of operations:
Selling price $97
Units in beginning inventory 0
Units produced 2,200
Units sold 2,100
Units in ending inventory 100
Variable costs per unit:
Direct materials $32
Direct labor $25
Variable manufacturing overhead $2
Variable selling and administrative $9
Fixed costs:
Fixed manufacturing overhead $8,800
Fixed selling and administrative $37,800
What is the total period cost for the month under the absorption costing approach?
Answer: $56,700
Total Variable selling and administrative cost = $9 X 2,100 = $18,900
Period cost = Variable selling and administrative cost + Fixed selling and administrative cost
= 18,900 + 37,800 = $56,700
Mullee Corporation produces a single product and has the following cost structure:
Number of units produced each year 7,000
Variable costs per unit:
Direct materials $51
Direct labor $12
Variable manufacturing overhead $2
Variable selling and administrative expense $5
Fixed costs per year:
Fixed manufacturing overhead $441,000
Fixed selling and administrative expense $112,000
The unit product cost under absorption costing is:
Answer: D $128
Unit fixed manufacturing overhead = 441,000 ÷ 7,000 = $63
Unit product cost = 63 + 51 + 12 + 2 = $128
Stoneberger Corporation produces a single product and has the following cost structure:
Number of units produced each year 4,000 Variable costs per unit:
Direct materials $50
Direct labor $72
Variable manufacturing overhead $6
Variable selling and administrative expense $3
Fixed costs per year:
Fixed manufacturing overhead $296,000
Fixed selling and administrative expense $76,000
The unit product cost under variable costing is:
Answer: A $128
Unit product cost = 50 + 72 + 6 = $128
Beamish Inc., which produces a single product, has provided the following data for its most
recent month of operations:
Number of units produced 8,000
Variable costs per unit:
Direct materials $37
Direct labor $56
Variable manufacturing overhead $4
Variable selling and administrative expense $2
Fixed costs:
Fixed manufacturing overhead $312,000
Fixed selling and administrative expense $448,000
There was no beginning or ending inventories. The unit product cost under absorption costing
was:
Answer: C $136
Unit fixed manufacturing overhead = $312,000 ÷ 8,000 = $39
Unit product cost = 37 +56 + 4 +39 = $136
Kray Inc., which produces a single product, has provided the following data for its most recent
month of operations:
Number of units produced 3,000
Variable costs per unit:
Direct materials $91
Direct labor $13
Variable manufacturing overhead $7
Variable selling and administrative expense $6
Fixed costs:
Fixed manufacturing overhead $237,000
Fixed selling and administrative expense $165,000
There were no beginnings or ending inventories. The unit product cost under variable costing
was:
Answer: A $111
Unit product cost = Direct materials + Direct labor + Variable manufacturing overhead
= $91 + $13 + $7 = $111
