## GoldRush18 3 years ago Philmore Corp. produces a single product. The following is a cost structure applied to its first year of operations, 2005: Sales Price- \$15 per unit Variable Costs: Selling expenses \$2 er unit Manufacturing \$4 per unit Fixed costs(total incurred for the year): Selling expenses \$14 000 Manufacturing \$20 000 During 2005, Philmore Corp. manufactured 5 000 units and sold 3 800. There was no beginning or ending work-in-process inventory. Prepare the income statement using the absorption costing format. Prepare the income statement using the variable costing format.

1. sheg

ABSORPTION COSTING PRO-FORMA \$ \$ Sales Revenue xxxxx Less Absorption Cost of Sales Opening Stock (Valued @ absorption cost) xxxx Add Production Cost (Valued @ absorption cost) xxxx Total Production Cost xxxx Less Closing Stock (Valued @ absorption cost) (xxx) Absorption Cost of Production xxxx Add Selling, Admin & Distribution Cost xxxx Absorption Cost of Sales (xxxx) Un-Adjusted Profit xxxxx Fixed Production O/H absorbed xxxx Fixed Production O/H incurred (xxxx) (Under)/Over Absorption xxxxx Adjusted Profit xxxxx

2. GoldRush18

i have the format and all but its when i plug in the figures somethings wrong

3. sheg

Here sales revenue = 3800*\$15 = \$ 57,000

4. GoldRush18

i have that correct

5. GoldRush18

what would b the opening inventory figure?

6. sheg

opening stock is not mentioned so it would be zero

7. GoldRush18

thats what i have as well

8. sheg

that is correct read this statement carefully Philmore Corp. produces a single product. The following is a cost structure applied to its first year of operations, 2005:

9. sheg

got it

10. GoldRush18

yea

11. sheg

now absorption cost is equal to

12. GoldRush18

8 right?

13. GoldRush18

its better when we take it step by step i understand it more

14. sheg

yeah

15. sheg

can u tell me how u calculate Absorption Cost

16. GoldRush18

Unit Production Cost Absorption Costing Method \$ Direct material 0 Direct labour 0 Variable manufacturing overhead 4 Total variable production 4 Fixed manufacturing over head 4 unit product cost 8

17. sheg

good

18. GoldRush18

thanks

19. sheg

ABSORPTION COST = VARIABLE COST DIRECT LABOUR + DIRECT MATERIAL + DIRECT EXPENSE + VARIABLE OVERHEADS

20. GoldRush18

?