The following information relates to Ronald Industries for fiscal 2008, the company's first year of operation:
|
Units produced
|
100,000
|
|
Units sold
|
80,000
|
|
Units in ending inventory
|
20,000
|
|
Fixed manufacturing overhead
|
$500,000
|
Required:
Calculate the amount of fixed manufacturing overhead that would be expensed in 2008 using full costing.
Fixed manufacturing overhead calculated using full costing is equal to Fixed manufacturing overhead for the year/ number of units produced
=$500,000 / 100,000
= $5
Calculate the amount of fixed manufacturing overhead that would be expensed in 2008 using variable costing.
Calculate the amount of fixed manufacturing overhead that would be included in ending inventory under full costing and reconcile it to the difference between parts a and b.