ACCT 321 HomeWork 7-2 Solution

ACCT 321 HomeWork 7-2 Solution

 

OxiClear manufactures a tile and grout cleaner. The company was formed during the
current year. As a result, there was no beginning inventory. Management is evaluating
performance and inventory management issues, and desires to know both net income
and ending inventory under generally accepted accounting principles (absorption
costing) as well as variable costing methods. Relevant facts are as follows:

Selling price per gallon

$

4.40

Variable manufacturing cost per gallon

0.80

Variable SG&A costs per gallon

0.90

Fixed manufacturing costs
Fixed SG&A
Total gallons produced
Total gallons sold

$

1,450,000
235,000
650,000
620,000

Absorption Costing
Variable manufacturing costs

$

Fixed manufacturing costs

Cost of goods manufactured

$

Cost of goods sold

Ending inventory

$

Sales

$

Cost of goods sold

Gross profit

$

Selling, general, & administrative costs
Variable

$

Fixed

Net income

$

Ending inventory

$

Sales

$

Variable Costing

Variable manufacturing costs

Variable manufacturing margin

$

Variable SG&A

Contribution margin

$

Fixed expenses
Manufacturing
SG&A
Net income

$

$