Problem:
(Production cost; absorption vs. variable costing) Bright Smile Mouthwash began business in 1999. Production for the year was 100,000 bottles of mouthwash, and sales were 98,000 bottles. Costs incurred during the year were as follows:
|
Ingredients used
|
$28,000
|
|
Direct labor
|
13,000
|
|
Variable overhead
|
24,000
|
|
Fixed overhead
|
12,000
|
|
Variable selling expenses
|
5,000
|
|
Fixed selling and administrative expenses
|
14,000
|
|
Total actual costs
|
$96,000
|
a. What was the actual production cost per bottle under variable costing? Under absorption costing?
b. What was variable Cost of Goods Sold for 1999 under variable costing?
c. What was Cost of Goods Sold for 1999 under absorption costing?
d. What was the value of ending inventory under variable costing? Under absorption costing?
e. How much fixed overhead was charged to expense in 1999 under variable costing? Under absorption costing?