Boston, Inc., planned and actually manufactured 260,000 units of its single product in 2020, its first year of operation. Variable manufacturing cost was $18 per unit produced. Variable operating (nonmanufacturing) cost was $15 per unit sold.
Planned and actual fixed manufacturing costs were $1,300,000. Planned and actual fixed operating (nonmanufacturing) costs totaled $420,000. Boston sold 150,000 units of product at $45 per unit.
Read the requirements.
Requirement 1. Boston's 2020 operating income using absorption costing is (a) $630,000, (b) $80,000, (c) $500,000, (d) $1,050,000, or (e) none of these. Show supporting calculations.
Begin by selecting the labels used in the absorption costing calculation of operating income and enter the supporting amounts. Perform the calculations in this step, but select the correct operating income in the next step. (For amounts with a $0
balance, make sure to enter "0" in the appropriate cell.)
Revenues
Cost of goods sold:
Absorption costing
Beginning inventory
Variable manufacturing costs
Allocated fixed manufacturing costs
Cost of goods available for sale
Deduct ending inventory
Cost of goods sold
Gross margin
Variable operating costs
Fixed operating costs
Operating income
Requirements
1. Boston's 2020 operating income using absorption costing is (a) $630,000, (b)
$80,000, (c) $500,000, (d) $1,050,000, or (e) none of these. Show supporting
calculations.
2. Boston's 2020 operating income using variable costing is (a) $1,380,000, (b)
$630,000, (c) $80,000, (d) $500,000, or (e) none of these. Show supporting
calculations.
