PROBLEM 4-Betty, Inc., incurs the following costs to produce and sell a single product.Variable costs per unit:Direct materialsDirect laborVariable manufacturing overheadVariable selling and administrative expensesFixed costs per year:Fixed manufacturing overheadFixed selling and administrative expensesP10P5P2P4P90,000P300,000During the last year, 30,000 units were produced and 25,000 units were sold. The FinishedGoods inventory account at the end of the year shows a balance of P85,000 for the 5,000unsold units.Required:1. Is the company using absorption costing or variable costing to cost units in the FinishedGoods inventory account? Show computations to support your answer.2.Assume that the company wishes to prepare financial statements for the year to issue toits stockholders.a. Is the P85,000 figure for Finished Goods inventory the correct amount to use on thesestatements for external reporting purposes? Explain.b. At what dollar amount should the 5,000 units be carried in inventory for externalreporting purposes?

The variable costing income statement is used for internal reporting purposes. The absorption…

PROBLEM 4- Betty, Inc., incurs the following costs to produce and sell a single product. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses P10 P5 P2 P4 P90,000 P300,000 During the last year, 30,000 units were produced and 25,000 units were sold. The Finished Goods inventory account at the end of the year shows a balance of P85,000 for the 5,000

PROBLEM 4- Betty, Inc., incurs the following costs to produce and sell a single product. Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses P10 P5 P2 P4 P90,000 P300,000 During the last year, 30,000 units were produced and 25,000 units were sold. The Finished Goods inventory account at the end of the year shows a balance of P85,000 for the 5,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?