Scenic company had 11500 units in its ending inventory on...

Scenic Company had 11,500 units in its ending inventory on December 31, 2023. During 2023, the company’s variable production costs were $8 per unit and its fixed manufacturing overhead rate was $5 per unit. If the company’s operating income for 2023 was $13,000 lower under variable costing than it was under absorption costing, how many units were in beginning inventory on January 1, 2023? (Assume the company uses normal costing) a. 14,100 units b. 13,125 units c. 9,875 units d. 14,000 units e. 10,500 units f. 8,900 units g. 12,500 units h. None of the above

Transcript

00:02 There are two questions given to us that is a and b.

00:05 So let's answer them one by one in question a we have to calculate the standard cost and profit for one unit of output.

00:12 So standard cost for one unit of output is direct material cost is equal to 2 kilos multiplied by n 4 .5 per kilo, which is equal to n 9 then direct labor cost is equal to 3r multiplied by n 5 per hour, which is equal to n 15 then variable overhead cost.

00:54 Is equal to 3r multiplied by n 3 per hour, which is equal to n 9 total variable cost is equal to n 9 added to n 15 added to n 9, which is equal to n 33 then standard selling price per unit is equal to n dollar 50 then standard profit per unit is equal to standard selling price added from total variable cost, which is equal to n dollar 50 subtracted from n 33.

02:10 Is equal to n dollar 17 question baby have to prepare a profit statement for each month using so first marginal costing.

02:28 So marginal costing focuses on variable cost and treats fixed cost as period cost.

02:34 So the period sorry the profit statement for each month under marginal costing is as follows january sales is equal to 14 ,000 multiplied by n dollar 50, which is equal to n dollar 7 lakh then variable cost of good.

03:01 So, static materials is equal to 14 ,000 units multiplied by n 9 evaluating it we get n dollar 1 lakh 26 ,000 then direct labor is equal to 14 ,000 units multiplied by n 15 evaluating it we get n dollar 2 lakh 10 ,000 then variable overhead.

03:49 Is equal to 14 ,000 units multiplied by n 9 evaluating it we get n dollar 1 lakh 26 ,000 now total variable cost is equal to n dollar 1 lakh 26 ,000 added to n dollar 2 lakh 10 ,000 added to dollar sorry added to n dollar 1 lakh 26 ,000 evaluating it we get n dollar 4 lakh 62 ,000 then contribution margin is equal to sales subtracted from total variable cost is equal to putting the values n dollar 7 lakh subtracted from n dollar 4 lakh 62 ,000 evaluating it we get n dollar 2 lakh 38 ,000 then fixed overhead that is budgeted is equal to n dollar 90 ,000 then profit before tax is equal to contribution margin subtracted from fixed overhead which is equal to putting the values n dollar 2 lakh 38 ,000 subtracted from n dollar 90 ,000 evaluating it we get n dollar 1 lakh 48 ,000 then february sales is equal to 16 ,000 units multiplied by n dollar 50 evaluating it we get n dollar 8 lakh variable cost of goods sold.

06:12 So direct materials is equal to 16 ,000 units multiplied by n 9 which is equal to n dollar 1 lakh 44 ,000.

06:30 That is labor is equal to 16 ,000 units multiplied by n 15 evaluating it we get n dollar 2 lakh 40 ,000 then variable cost...

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