Problem - variable and full costing income comprehensive


Problem - Variable and Full Costing Income: Comprehensive Problem

The following information relates to Porter Manufacturing for fiscal 2011, the company's first year of operation:

Selling price per unit $ 150

Direct material per unit $ 75

Prepare Direct labor per unit $ 30

Variable manufacturing overhead per unit $ 5

Variable selling cost per dollar of sales $ 0.05

Annual fixed manufacturing overhead $2,750,000

Annual fixed selling expense $1,500,000

Annual fixed administrative expense $ 900,000

Units produced 250,000

Units sold 230,000

Required -

a. Prepare an income statement using full costing.

b. Prepare an income statement using variable costing.

c. Calculate the amount of fixed manufacturing overhead that will be included in ending inventory under full costing and reconcile it to the difference between income computed under variable and full costing.

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Accounting Basics: Problem - variable and full costing income comprehensive
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