Question

Langdon Company produced 9,600 units during the past year, but only 8,500 of the units were sold. The following additional information is also available.
Direct materials used $105,600
Direct labor incurred $28,000
Variable manufacturing overhead $20,000
Fixed manufacturing overhead $48,000
Fixed selling and administrative expenses $71,000
Variable selling and administrative expenses $8,000

There was no work in process inventory at the beginning and end of the year, nor did Langdon have any beginning finished goods inventory.

Required:
a. What would be Langdon Company’s finished goods inventory cost on December 31 under variable costing?
b. Which costing method, absorption or variable costing, would show a higher net income for the year? By what amount?

Answer 1

Answer:

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