Exercise 7-6

1. Absorption costing

Dm = 50

DL =80

VMOH = 20

Total VMOH =150

FMOH =150+35

=$185 (70,000/20,000)

2. Income statement

Sales (19,000x210) 3,990,000

COGS

Beginning inventory 0

(+) COGM(20,000x185) 3,700,000

(-) Ending inventory(1,000x185) 185,000

COGS 3,515,000

Gross margin 475,000

S/A 475,000

(19,000x10+285,000)

NOI 0

Exercise 7-9
 1. Variable costing

DM 5

DL 6

VMOH 1

12 unit product cost

Whitman Company

Income Statement

Sales (35,000x25) 875,000

VCOGS

Beginning inventory 0

(+) Variable manufacturing cost(40,000x12) 480,000

480,000

(-) Ending inventory(5,000x12) 6,000

420,000

(+) V S/A(35,000x2) 70,000 490,000

CM 385,000

Fixed Expenses :

F MOH 160,000

F S/A 210,000 370,000

NOI 15,000