Emerson Corporation just completed its first year of operations.Planned and actual production equaled 17,000 units, and salestotaled 15,300 units at $107 per unit. Cost data for the year areas follows:
| | | |
| Direct material (per unit) | $ | 21 | |
| Conversion cost: | | | |
| Direct labor | | 544,000 | |
| Variable manufacturing overhead | | 459,000 | |
| Fixed manufacturing overhead | | 544,000 | |
| Selling and administrative costs: | | | |
| Variable (per unit) | | 23 | |
| Fixed | | 356,900 | |
|
Required:
- Compute the company’s total cost for the year assuming thatvariable manufacturing costs are driven by the number of unitsproduced, and variable selling and administrative costs are drivenby the number of units sold.
- How much of this cost would be held in year-end inventory under(a) absorption costing and (b) variable costing?
- How much of the company’s total cost for the year would beincluded as an expense on the period’s income statement under (a)absorption costing and (b) variable costing?
