ACC 561 QUESTION 13-45 Chan Manufacturing Company for 20X7 follow
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)
Question 13-45, Variable and Absorption Costing, on p. 621
ACC 561 C13-45 Chan Manufacturing Company
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
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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