overapplied by $1,200,000.
d. underapplied by $1,200,000.
e. underapplied by $900,000.
b. underapplied by $580,000.
Sting Corporation credited Manufacturing Overhead and debited Cost of Goods sold as an
adjusting entry at year-end. On the basis of this information, one can conclude that:
a. budgeted overhead exceeded actual overhead.
b. budgeted overhead exceeded applied overhead.
c. budgeted overhead was less than applied overhead.
d. actual overhead exceeded applied overhead.
e. actual overhead was less than applied overhead.
d. actual overhead exceeded applied overhead.
Santa Fe Corporation has computed the following unit costs for the year just ended:
Direct material used $25
Direct labor 19
Variable manufacturing overhead 35
Fixed manufacturing overhead 40
Variable selling and administrative cost 17
Fixed selling and administrative cost 32
Which of the following choices correctly depicts the per-unit cost of inventory under
variable costing and absorption costing?
Variable Costing Absorption Costing
A. $79 $119
B. $79 $151
C. $96 $119
D. $96 $151
E. Some other combination of figures not listed above
A. $79 $119
Note that selling and administrative costs do not flow through inventory. Therefore, we can
ignore the $17 and $32 amounts in this problem. Under variable costing, we expense fixed
manufacturing overhead as a period cost, and it does not flow through inventory.
Therefore, we sum the first 3 numbers to get the cost per unit. $25+19+35=$79. Under
absorption costing, fixed manufacturing overhead is included in inventory. Adding $40 to
$79 gives $119.
O’Dale sells two products. Product R has a sales price of $4 and a variable cost of $2,
while Product T has a sales price of $10 and a variable cost of $4. What is O’Dale’s
