Home Base, Inc Assume That Productions Costs Have Remained the Same Since the Beginning

question 29

Essay

Home Base, Inc.reports the following production cost information:
$\begin{array}{ll}\text { Beginning inventory } & 10,000 \text { units } \\\text { Units produced } & 97,000 \text { units } \\\text { Units sold } & 92,000 \text { units } \\\text { Direct labor } & \$ 17 \text { per unit } \\\text { Direct materials } & \$ 34 \text { per unit } \\\text { Variable overhead } & \$ 2,522,000 \text { in total } \\\text { Fixed overhead } & \$ 1,940,000 \text { in tota } \\\text { Operating costs } & \$ 2,000,000 \text { in total }\end{array}$ Assume that productions costs have remained the same since the previous period and all units are sold for $137.00 per unit.
a.Compute production cost per unit under variable costing.
b.Compute production cost per unit under absorption costing.
c.Determine net income using variable costing.
d.Determine net income using absorption costing.

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Definitions:

Complementary Goods

Products and services that are used together. When the price of one falls, the demand for the other increases (and conversely).

Positive

Pertaining to statements or analyses that are based on facts and devoid of any value judgments or recommendations.

Supply Curves

Graphical representations that show the relationship between the price of a good and the total amount of the good that suppliers are willing to sell.

Highly Inelastic

Describes a situation where the quantity demanded or supplied changes very little in response to changes in price.