13-45 Variable and Absorption Costing Chan Manufacturing Company data for 20X7 follow: Sales: 12,000 units at $17 each Actual production 15,000 units Expected volume of production 18,000 units Manufacturing costs incurred Variable $120,000 Fixed 63,000 Nonmanufacturing costs incurred Variable $ 24,000 Fixed 18,000
Introduction to Management Accounting
Horngren, C. T., Sundem, G. L., Stratton, W. O., Burgstahler, D., & Schatzberg, J. (2008).
Introduction to Management Accounting (14th ed.). Upper Saddle River, New Jersey: Pearson-
Prentice Hall.
Axia College of University of Phoenix (UoP)
3. Individual Assignment: Text Exercises
• Complete the following Problem Sets from the text. Show your work.
Question 13-45, Variable and Absorption Costing, on p. 621
Question 13-45 Chan Manufacturing Company data for 20X7 follow: Sales: 12,000 units at $17 each Actual production 15,000 units Expected volume of production 18,000 units Manufacturing costs incurred Variable $120,000 Fixed 63,000 Nonmanufacturing costs incurred Variable $ 24,000 Fixed 18,000
1. Determine operating income for 20X7, assuming the firm uses the variable-costing approach to product costing. (Do not prepare a statement.)
2. Assume that there is no January 1, 20X7, inventory; no variances are allocated to inventory; and the firm uses a “full absorption” approach to product costing. Compute
(a) The cost assigned to December 31, 20X7, inventory; and
(b) Operating income for the year ended December 31, 20X7. (Do not prepare a statement.)
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