The information that follows pertains to Consumer Products for the year ended December 31, 20X6.
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Inventory, 1/1/X6
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24,000 units
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Units manufactured
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80,000
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Units sold
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82,000
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Inventory, 12/31/X6
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? units
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Manufacturing costs:
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Direct materials
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$3 per unit
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Direct labor
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$5 per unit
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Variable factory overhead
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$9 per unit
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Fixed factory overhead
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$280,000
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Selling & administrative expenses:
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Variable
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$2 per unit
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Fixed
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$136,000
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The unit selling price is $26. Assume that costs have been stable in recent years.
Instructions:
a. Compute the number of units in the ending inventory.
b. Calculate the cost of a unit assuming use of:
1. Direct costing.
2. Absorption costing.
c. Prepare an income statement for the year ended December 31, 20X6, by using direct costing.
d. Prepare an income statement for the year ended December 31, 20X6, by using absorption costing.