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
$
–
$