Compute the amount of income before income taxes and ending


1. The following data relate to Flores Company for the year ended December 31, 19x8:

Cost of production:


Direct materials

$168,000

Direct labor

252,000

Factory overhead:


Variable

90,000

Fixed

180,000

Sales commission (variable)

44,000

Sales salaries (fixed)

46,000

General and administrative expenses (fixed)

62,000

Units produced

75,000 units

Units sold (@$18)

60,000

(a) Compute the amount of income before income taxes and ending inventory under (1) absorption costing and (2) direct costing.

(b) Reconcile the difference in income before taxes between the two methods.

 

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Taxation: Compute the amount of income before income taxes and ending
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