Chapter 8 166 Problem 4 Belmont Inc Has Just Completed Its First Year Of Operations The Unit Costs On A Normal Costi 1 (148.87 KiB) Viewed 95 times
Chapter 8 166 Problem 4 Belmont Inc Has Just Completed Its First Year Of Operations The Unit Costs On A Normal Costi 2 (41.3 KiB) Viewed 95 times
Chapter 8 166 PROBLEM 4 Belmont, Inc., has just completed its first year of operations. The unit costs on a normal costing basis are as follows: $ 6.00 per unit 16.00 per unit 3.50 per unit ? $ ? Manufacturing costs: Direct materials (3 lbs. @ $2). Direct labour (2 hrs. @ $8) Variable overhead (2 hrs. @ $1.75) Fixed overhead. Total...... Selling and administrative costs: Variable..... Fixed $4.00 per unit $100,000 During the year, the company had the following activity: 20,000 Units produced Units sold. 16,000 Unit selling price $50 Direct labour hours worked 40,000 Actual fixed overhead was $170,000 for the year, and actual variable overhead was $72,000. Bud- direct labour hours to compute the predetermined overhead rates. Any overhead variances geted fixed overhead was $180,000, and the company used an expected activity level of 40,000 are closed to Cost of Goods Sold. Instructions: 1. Compute the unit cost using each of the following: a. absorption costing b. variable costing
1108 PROBLEM 4 (Continued) 3. Prepare a variable-costing income statement. 4. Reconcile the difference between the two income statements.
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