Assignment: Summit Manufacturing, Inc. produces snow shovels.The selling price per snow shovel is $30.
Costs involved in production are:
Direct material $ 5
Direct labor 4
Variable manufacturing overhead 3
Total variable manufacturing costs per unit $ 12
Fixed manufacturing overhead per year $180,000
In addition, the company has fixed selling and administrative costs of $160,000 per year.
Question 1: During the year,Summit produces 40,000 snow shovels and sells 37,000 snow shovels.
Required: What is the value of ending inventory using full costing?
Question 2: During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.
Required: What is the value of ending inventory using variable costing?
Question 3: During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.
Required: Calculate the difference in full costing net income and variable costing net income without preparing either income statement.
Question 4: During the year,Summit produces 40,000 snow shovels and sells 37,000 snow shovels.
Required: What is cost of goods sold using full costing?
Question 5: During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.
Required: What is variable cost of goods sold?
Question 6: During the year,Summit produces 40,000 snow shovels and sells 37,000 snow shovels.
Required: What is net income using full costing?
Question 7: During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.
Required: What is net income using variable costing?
Question 8: During the year, Summit produces 40,000 snow shovels and sells 37,000 snow shovels.
Required: How much fixed manufacturing overhead is in ending inventory under full costing? Compare this amount to the difference in the net incomes calculated in question 1.