Philmore Corp. produces a single product. The following is a cost structure applied to its first year of operations, 2005:
Sales Price- $15 per unit
Variable Costs:
Selling expenses $2 er unit
Manufacturing $4 per unit

Fixed costs(total incurred for the year):
Selling expenses $14 000
Manufacturing $20 000

During 2005, Philmore Corp. manufactured 5 000 units and sold 3 800. There was no beginning or ending work-in-process inventory.

Prepare the income statement using the absorption costing format.

Prepare the income statement using the variable costing format.

Question

Philmore Corp. produces a single product. The following is a cost structure applied to its first year of operations, 2005:
Sales Price- $15 per unit
Variable Costs:
Selling expenses $2 er unit
Manufacturing $4 per unit

Fixed costs(total incurred for the year):
Selling expenses $14 000
Manufacturing $20 000

During 2005, Philmore Corp. manufactured 5 000 units and sold 3 800. There was no beginning or ending work-in-process inventory.

Prepare the income statement using the absorption costing format.

Prepare the income statement using the variable costing format.

anonymous · Answer

ABSORPTION COSTING PRO-FORMA

 	                                                                            $	        $
Sales Revenue	 	                                                             xxxxx
Less Absorption Cost of Sales	 	 
Opening Stock (Valued @ absorption cost)	                    xxxx	 
Add Production Cost (Valued @ absorption cost)	            xxxx	 
Total Production Cost	                                                    xxxx	 
Less Closing Stock (Valued @ absorption cost)	            (xxx)	 
Absorption Cost of Production	                                    xxxx	 
Add Selling, Admin & Distribution Cost	                            xxxx	 
Absorption Cost of Sales	 	                                              (xxxx)
Un-Adjusted Profit	 	                                                      xxxxx
Fixed Production O/H absorbed	                                     xxxx	 
Fixed Production O/H incurred	                                    (xxxx)	 
(Under)/Over Absorption	 	                                              xxxxx
Adjusted Profit	 	                                                              xxxxx

goldrush18 · Answer

i have the format and all but its when i plug in the figures somethings wrong

anonymous · Answer

Here sales revenue = 3800*$15 = $ 57,000

goldrush18 · Answer

i have that correct

goldrush18 · Answer

what would b the opening inventory figure?

anonymous · Answer

opening stock is not mentioned so it would be zero

goldrush18 · Answer

thats what i have as well

anonymous · Answer

that is correct read this statement carefully
Philmore Corp. produces a single product. The following is a cost structure applied to its first year of operations, 2005:

anonymous · Answer

got it

goldrush18 · Answer

yea

anonymous · Answer

now absorption cost is equal to

goldrush18 · Answer

8 right?

goldrush18 · Answer

its better when we take it step by step i understand it more

anonymous · Answer

yeah

anonymous · Answer

can u tell me how u calculate Absorption Cost

goldrush18 · Answer

Unit Production Cost
          Absorption Costing Method
                                                                  $
Direct material                                          0
Direct labour                                             0
Variable manufacturing overhead            4
Total variable production                         4
Fixed manufacturing over head                4
unit product cost                                       8

anonymous · Answer

good

goldrush18 · Answer

thanks

anonymous · Answer

ABSORPTION COST =	VARIABLE COST DIRECT LABOUR + DIRECT MATERIAL + DIRECT EXPENSE + VARIABLE OVERHEADS

goldrush18 · Answer

?