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Summit Manufacturing, Inc. produces snow shovels. The selling price per snow shovel is $30. There is no beginning inventory.
Costs involved in production are:
Direct materials$5.00
Direct labor4.00
Variable manufacturing overhead3.00
Total variable manufacturing costs per unit$12.00
Fixed manufacturing overhead per year$180,000
In addition, the company has fixed selling and administrative costs of$160,000 per year.
Exercise E5-11
During the year, Summit produces 50,000 snow shovels and sells 45,000 snow shovels.
Required: What is the value of ending inventory using full costing?
Exercise E5-12
During the year, Summit produces 50,000 snow shovels and sells 45,000snow shovels.
Required: What is the value of ending inventory using variable costing?
Exercise E5-13
During the year, Summit produces 50,000 snow shovels and sells 45,000 snow shovels.
Required: Calculate the difference in full costing net income and variable costing net income
without preparing either income statement.
Exercise E5-14
During the year, Summit produces 50,000 snow shovels and sells 45,000 snow shovels.
Required: What is the cost of goods sold using full costing?
Exercise E5-15
During the year, Summit produces 50,000 snow shovels and sells 45,000 snow shovels.
Required: What is the variable cost of goods sold?
Exercise E5-16
During the year, Summit produces 50,000 snow shovels and sells 45,000 snow shovels.
Required: What is net income using full costing?
Exercise E5-17
During the year, Summit produces 50,000 snow shovels and sells 45,000 snow shovels.
Required: What is net income using variable costing?
Exercise E5-18
During the year, Summit produces 50,000 snow shovels and sells 45,000 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 Exercise 5-13.
Please show work.
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