Question 1
Consider the following information:
|
|
Q1
|
Q2
|
Q3
|
|
Beginning inventory (units)
|
0
|
J
|
1,100
|
|
Budgeted units to be produced
|
20,000
|
20,000
|
20,000
|
|
Actual units produced
|
19,000
|
20,600
|
Q
|
|
Units sold
|
A
|
20,600
|
R
|
|
Variable manufacturing costs per unit produced
|
$150
|
$150
|
$150
|
|
Variable marketing costs per unit sold
|
$20
|
$20
|
$20
|
|
Budgeted fixed manufacturing costs
|
$500,000
|
$500,000
|
$500,000
|
|
Fixed marketing costs
|
$200,000
|
$200,000
|
$200,000
|
|
Selling price per unit
|
$300
|
$300
|
$300
|
|
Variable costing operating income
|
B
|
$1,978,000
|
S
|
|
Absorption costing operating income
|
C
|
K
|
$1,859,000
|
|
Variable costing beginning inventory ($)
|
D
|
$165,000
|
T
|
|
Absorption costing beginning inventory ($)
|
E
|
L
|
U
|
|
Variable costing ending inventory ($)
|
F
|
M
|
$75,000
|
|
Absorption costing ending inventory ($)
|
G
|
N
|
$87,500
|
|
PVV
|
H
|
O
|
V
|
|
Allocated fixed manufacturing costs
|
I
|
P
|
$480,000
|
There are no price, efficiency, or spending variances, and any production-volume variance is directly written off to cost of goods in the quarter in which it occurs.
Complete the missing figures from the above Table. You need to show your work in order to be eligible for partial credit.
|
Q1
|
Q2
|
Q3
|
|
A
|
J
|
Q
|
|
B
|
K
|
R
|
|
C
|
L
|
S
|
|
D
|
M
|
T
|
|
E
|
N
|
U
|
|
F
|
O
|
V
|
|
G
|
P
|
|
|
H
|
|
|
|
I
|
|
|
Question 2
a) What is the goal of the EOQ model?
b) Why does a firm hold "safety stock?"
c) What costs are a firm trying to balance when it decides on how much safety stock to hold?