Campbell Company Gathered the Following Information for the Year Ended

question 128

Essay

Campbell Company gathered the following information for the year ended December 31,2015:
$\begin{array}{ll}\text { Units produced } & 45,000 \\\text { Units expected to be produced } & 45,000 \\\text { Units sold } & 43,200 \\\text { Direct labor } & \$ 137,200 \\\text { Direct materials used } & \$ 126,400 \\\text { Fixed selling and administrative expenses } & \$ 51,000 \\\text { Variable selling and administrative expenses } & \$ 58,000 \\\text { Fixed manufacturing overhead } & \$ 83,250 \\\text { Variable manufacturing overhead } & \$ 73,900 \\\text { Direct materials inventory, December 31, 2015 } & 0 \\\text { Direct materials inventory, December 31, 2014 } & 0 \\\text { Work-in-process inventory, December 31, 2015 } & 0 \\\text { Work-in-process inventory, December 31, 2014 } & 0 \\\text { Finished goods inventory, December 31, 2014 } & 0\end{array}$
Required:
A) Under absorption costing, what is the cost of the finished goods inventory on December 31, 2015?
B) Under variable costing, what is the cost of the finished goods inventory on December 31, 2015?

• A) Under absorption costing, what is the cost of the finished goods inventory on December 31, 2015?
• B) Under variable costing, what is the cost of the finished goods inventory on December 31, 2015?

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Definitions:

Par Common Stock

The face value of a share of common stock as specified in the corporate charter, with no bearing on the market value.

Fair Market Price

The price at which an asset would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Preferred Stock

Preferred Stock represents a class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often including fixed dividends.

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of the company's profits.