ch13-45 Chan Manufacturing Company data for 20X7 follow

ACC 561 C13-45 Chan Manufacturing Company 

Variable and Absorption Costing 

Chan Manufacturing Company data for 20X7 follow:

Sales: 12,000 units at $17 each

Actual production                                                                                            15,000 units

Expected volume of production                                                                                  18,000 nits

Manufacturing costs incurred

Variable                                                                                                           $120,000

Fixed                                                                                                               63,000

Nonmanufacturing costs incurred

Variable                                                                                                           $ 24,000

Fixed                                                                                                               18,000

1. Determine operating income for 20X7, assuming the firm uses the variable-costing approach to product costing. (Do not prepare a statement.)

2. Assume that there is no January 1, 20X7, inventory; no variances are allocated to inventory; and the firm uses a “full absorption” approach to product costing. Compute

(a) the cost assigned to December 31, 20X7, inventory; and

(b) Operating income for the year ended December 31, 20X7.

(Do not prepare a statement.)