Solving for Missing Values Using Absorption and Variable Costing Relationships
Each of the following situations is independent.
Required:
1. Kester Company had ending inventory cost of $5,000 under absorption costing. Ending inventory cost $3,400 under variable costing. Kester produced 16,000 units and sold 15,200. What was fixed overhead per unit?
$ per unit
If unit fixed overhead is based on normal production of 16,000 units, what was total fixed overhead?
$
2. Gonsalves Company has prime cost of $6 per unit. Total fixed overhead is $23,000 and is allocated based on normal production of 20,000 units. Ending inventory consists of 6,000 units which cost $8.00 per unit under absorption costing. What is variable overhead cost per unit? Round your answer to the nearest cent.
$ per unit
3. Last year, Shermer Company's operating income was $45,000 under absorption costing and $42,500 under variable costing. Fixed overhead was applied at the rate of $2.50 per unit. Beginning inventory was zero. How many units were in ending inventory?
Units