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Dexter Company Produces & Sells A Single Product, A Wooden Hand Loom For Weaving Small

Dexter company produces wooden hand looms that it sells for $50 each. In year 1 it produced 25,000 units and sold 20,000, leaving 5,000 in inventory. In year 2 it started with the 5,000 units in inventory, produced another 25,000, and sold 30,000, leaving no inventory. Financial information like direct costs, fixed overhead, and selling costs are provided to calculate unit product costs and income statements under absorption and variable costing methods.

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Sabbir Zaman
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461 views1 page

Dexter Company Produces & Sells A Single Product, A Wooden Hand Loom For Weaving Small

Dexter company produces wooden hand looms that it sells for $50 each. In year 1 it produced 25,000 units and sold 20,000, leaving 5,000 in inventory. In year 2 it started with the 5,000 units in inventory, produced another 25,000, and sold 30,000, leaving no inventory. Financial information like direct costs, fixed overhead, and selling costs are provided to calculate unit product costs and income statements under absorption and variable costing methods.

Uploaded by

Sabbir Zaman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Dexter company produces & sells a single product, a wooden hand loom for weaving small
items such as scarves. Selected cost & operating data relating to the product for two years are
given below:

Selling price per unit 50


Direct material 8
Direct labor 10
Variable manufacturing overhead 2
Fixed manufacturing overhead per year 3,50,000
Variable Selling & administrative 3
Fixed Selling & administrative per year 2,50,000
Year 1 Year 2
Units in Beginning inventory 0 5,000
Units produced during the year 25,000 25,000
Units sold during the year 20,000 30,000
Units in ending inventory 5,000 0

Required: [12]

1. Assume that the company uses absorption costing


a) Compute unit product cost in each year.
b) Prepare an income statement for each year.

2. Assume that the company uses variable costing


a) Compute unit product cost in each year.
b) Prepare an income statement for each year

3. Reconcile the variable costing & absorption costing net operating income.

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