Answer:
$208,000
Explanation:
The computation of the absorption-costing income is shown below:
As we know that
Net income = Gross profit - variable expense - fixed expense
where,
Gross profit is
= Sales - cost of goods sold
= (22000 units at $30) - (22,000 units at $14)
= $660,000 - $308,000
= $352,000
The $14 come from
= 8 + 150,000 ÷ 25,000
= 8 + 6
= 14
Now the variable expense is
= 22000 at $2
= $44,000
And, the fixed expense is $100,000
So, the net income is
= $352,000 - $44,000 - $100,000
= $208,000
Answer:
d. 6,700 units
Explanation:
The computation of the equivalent units for conversion cost by using the FIFO method is shown below:
= Beginning inventory units × remaining percentage + units started and completed + ending inventory units × completion percentage
= 5,000 × 10% + (10,000 - 5,000) + 2,000 × 60%
= 500 + 5,000 + 1,200
= 6,700 units
We simply applied the above formula
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Answer:
Closing value of inventory = $357 for 21 units
Explanation:
As for the provided information we have,
Under FIFO method we know,
FIFO means First In First Out, under this the goods bought at earliest are sold earliest.
That means first opening inventory is sold, then the inventory purchased at the earliest.
Now we have,
Opening Inventory = 27 units @ $17 = $459
Purchases:
Aug 5 22 units @ $16 = $352
Aug 12 26 units @ $17 = $442
Provided 54 units are sold on Aug 15, that means, opening inventory of 27 units, 22 units bought on Aug 5, and 54 - 27 - 22 = 5 units from purchases on Aug 12.
Therefore, after sale units left = 26 - 5 = 21 units
Thus, closing value of inventory = $357 for 21 units
