Coastal Corporation, Which Uses Throughput Costing, Began Operations at the Start

question 109

Essay

Coastal Corporation, which uses throughput costing, began operations at the start of the current year. Planned and actual production equaled 20,000 units, and sales totaled 17,500 units at $95 per unit. Cost data for the year were as follows: $\begin{array} { | l | r | } \hline \text { Direct materials (per unit) } & \text { \$ } 18 \\\hline \text { Conversion cost: } & \\\hline \text { Direct labor } & 160,000 \\\hline \text { Variable manufacturing overhead } & 280,000 \\\hline \text { Fixed manufacturing overhead } & 340,000 \\\hline \text { Selling and administrative costs (total) } & 430,000 \\\hline\end{array}$ The company classifies direct materials as a throughput cost.
Required:
A. Compute Coastal Corporation's total cost for the year.
B. How much of this cost would be held in year-end inventory under (1) absorption costing, (2) variable costing, and (3) throughput costing?
C. How much of Coastal Corporation's total cost for the year would appear on the period's income statement under (1) absorption costing, (2) variable costing, and (3) throughput costing?
D. Compute the year's throughput-costing net income.

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Definitions:

Unemployed Workers

Individuals of working age who are without work, available to work, and actively seeking employment.

Employed Workers

Individuals in the workforce who have secured employment and are currently working.

Unemployment Rate

The unemployment rate measures the percentage of the labor force that is jobless and actively seeking employment.

Cyclical Unemployment

A form of unemployment that occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work.