The Alliance For Global Education Operations And Supply Chain Management Assignment Help - Outback Corporation

Question - Outback Corporation manufactures rechargeable flashlights in Brisbane, Australia. The firm uses an
absorption costing system for internal reporting purposes; however, the company is considering using
variable costing. Data regarding Outback's planned and actual operations for 20x1 follow:
Budgeted Costs

Per Unit Total Actual Costs
Direct
materia
l
$ 12.20 $ 1,683,6
00 $ 1,537,2
00
Direct
labor 9.40
1,297,2
00
1,184,4
00
Variabl
e
manufa
cturing
overhe
ad
4.70 648,600 592,200
Fixed
manufa
cturing
overhe
ad
4.90 676,200 688,200
Variabl
e
selling
expens
es
7.70
1,062,6
00 931,700
Fixed
selling
expens
es
7.30
1,007,4
00
1,007,4
00
Variabl
e
admini
strative
expens
es
2.40 ...Read More 331,200 290,400
Fixed 3.10 427,800 433,800

admini
strative
expens
es

Total $ 51.70 $ 7,134,6
00 $ 6,665,3
00




















Planned Activity Actual Activity
Beginning finished-goods inventory in units 41,000 41,000
Sales in units 138,000 121,000
Production in units 138,000 126,000

The budgeted per-unit cost figures were based on Outback producing and selling 138,000 units in
20x1. Outback uses a predetermined overhead rate for applying manufacturing overhead to its
product. A total manufacturing overhead rate of $9.60 per unit was employed for absorption costing
purposes in 20x1. Any overapplied or underapplied manufacturing overhead is closed to the Cost of
Goods Sold account at the end of the year. The 20x1 beginning finished-goods inventory for
absorption costing purposes was valued at the 20x0 budgeted unit manufacturing cost, which was the
same as the 20x1 budgeted unit manufacturing cost. There are no work-in-process inventories at
either the beginning or the end of the year. The planned and actual unit selling price for 20x1 was
$70.40 per unit.
Required:
Was Outback's 20x1 income higher under absorption costing or variable costing?
It was higher under variable costing.
It was higher under absorption costing.
1.
Compute the value of Outback Corporation's 20x1 ending finished-goods inventory under
absorption costing.(Do not round your intermediate calculations. Omit the "$" sign in your
response.)
Finished-goods inventory $
2. Compute the value of Outback Corporation's 20x1 ending finished-goods inventory under variable
costing.(Do not round your intermediate calculations. Omit the "$" sign in your response.)

Finished-goods inventory $

3.
Compute the difference between Outback Corporation's 20x1 reported income calculated under
absorption costing and calculated under variable costing. (Do not round your intermediate
calculations. Omit the "$" sign in your response.)

Difference in reported income $ ...Read Less

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