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    Clinton Corporation produced 10,000 units in its first year of operations and sold 7,000 units. Variable costs per unit included direct material, direct labor, and manufacturing overhead of $70. Based on absorption costing, Clinton Corporation's income for the year would be $21,000 higher than under variable costing due to the allocation of $30,000 of fixed manufacturing overhead costs to inventory.

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    Clinton Corporation produced 10,000 units in its first year of operations and sold 7,000 units. Variable costs per unit included direct material, direct labor, and manufacturing overhead of $70. Based on absorption costing, Clinton Corporation's income for the year would be $21,000 higher than under variable costing due to the allocation of $30,000 of fixed manufacturing overhead costs to inventory.

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    5 views1 page

    Adobe Scan Nov 10, 2021

    Uploaded by

    Khaled
    Clinton Corporation produced 10,000 units in its first year of operations and sold 7,000 units. Variable costs per unit included direct material, direct labor, and manufacturing overhead of $70. Based on absorption costing, Clinton Corporation's income for the year would be $21,000 higher than under variable costing due to the allocation of $30,000 of fixed manufacturing overhead costs to inventory.

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    of 1

    . Refer to Ford Company.

    If Ford Company were using variable costing what would it show as the

    valueSI20,000
    of ending inventory
    b.
    500
    S27,000
    d $24,000

    ANS: C_
    LB,000 units* S9.00'unit=$27,000
    DIF: Fasy OB): 3-7

    Clinton Corporation

    The following information has been extractod from the financial records of Clinton Corporation for its
    irst year of
    operations
    Units produced 10,000
    Units sold
    7,000
    Variable costs per
    un
    Direct material
    Direct labor
    Manufacturing overhecad
    A

    Manufacturing overhead $70.00


    30,000

    9Reler to Clinton Carporation. Based on absorption costing. Clinton Caporation's income in its firs
    will be
    ycar ot operations
    a. $21,0O0 higher than it would be under variable costing.

    b.S000 higher thanit would be


    S30,0OO hagher than
    under vanable costing.
    C. beit
    would under variable costing
    d. higher than it would be under variable costing. but the exact diterence cannot be
    determined from the information
    given
    ANS: AA
    L3,000 unsold units" $7.00 fixed overheadunit =$21.000 higher under absorption costing
    DIF: Moderate OBJ: 3-7

    77

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