Problem 8-35 

Variable-Costing and Absorption-Costing Income

Tenley Company produces and sells wooden pallets that are used for moving and stacking materials. The operating costs for the past year were as follows: 

During the year, Tenley produced 300,000 wooden pallets and sold 306,500 at $9 each. Tenley had 11,300 pallets in beginning finished goods inventory; costs have not changed from last year to this year. An actual costing system is used for product costing.

1. What is the per-unit inventory cost that will be reported on Tenley’s balance sheet at the end of the year? How many units are in ending inventory? What is the total cost of ending inventory? Round the per unit amount to the nearest cent.

Per-unit inventory cost$  Units in ending inventory   unitsTotal ending inventory$  

2. Calculate absorption-costing operating income.

$  

3. Conceptual Connection: What would the per-unit inventory cost be under variable costing? Round to the nearest cent.

$  

Does this differ from the unit cost computed in Requirement 1?

SelectYesNoItem 6

Why?

SelectBecause the balance sheet is for external use and reflects absorption costing.Because the balance sheet is for external use and reflects variable costing.Because the balance sheet is for internal use and reflects variable costing.Because the balance sheet is for internal use and reflects absorption costing.Item 7

4. Calculate variable-costing operating income.

$  

5. Suppose that Tenley Company had sold 296,700 pallets during the year. What would absorption-costing operating income have been? Variable-costing income?

Absorption costing income$  

Variable costing income

Problem 5-46

Overhead Application and Job-Order Costing

Heurion Company is a job-order costing firm that uses a plantwide overhead rate based on direct labor hours. Estimated information for the year is as follows:

Heurion worked on five jobs in July. Data are as follows:

By July 31, Jobs 741 and 743 were completed and sold. The remaining jobs were in process.

1.  Calculate the plantwide overhead rate for Heurion Company. Round your answer to the nearest cent.

$   per DLH

 Hide  

2.  Prepare job-order cost sheets for each job showing all costs through July 31. Round your answers to the nearest dollar, if rounding is required. If an amount box does not require an entry, leave it blank or enter zero (“0”).

 Heurion Company  Job-Order Cost Sheets       Job 741   Job 742   Job 743   Job 744   Job 745  Balance, July 1  $   $   $   $   $   Direct materials                 Direct labor                 Applied overhead                 Total cost  $   $   $   $   $  

3.  Calculate the balance in Work in Process on July 31.

$  

4.  Calculate Cost of Goods Sold for July.

$  

Problem 6-46 

Basic Flows, Equivalent Units

Bowman Company produces an arthritis medication that passes through two departments: Mixing and Tableting. Bowman uses the weighted average method. Data for February for Mixing is as follows: BWIP was zero; EWIP had 7,200 units, 50 percent complete; and 84,000 units were started. Tableting’s data for February is as follows: BWIP was 4,800 units, 20 percent complete; and 2,400 units were in EWIP, 40 percent complete.

1.  For Mixing, calculate the (a) number of units transferred to Tableting, and (b) equivalent units of production.

a.  Units transferred to tableting  unitsb.  Equivalent units of production  units

2.  For Tableting, calculate the number of units transferred out to Finished Goods.

  units

3.  Suppose that the units in the mixing department are measured in ounces, while the units in Tableting are measured in bottles of 100 tablets, with a total weight of eight ounces (excluding the bottle). 

Decide how you would treat units that are measured differently.

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

  

Now, repeat Requirement 2 using this approach.

Units transferred out   units

$  

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