Webster, Inc Required:
A

question 5

Essay

Webster, Inc. began operations at the start of the current year, having a production target of 60,000 units. Actual production totaled 60,000 units, and the company sold 95% of its manufacturing output at $50 per unit. The following costs were incurred: $$\begin{array}{l}\text { Manufacturing: }\\\begin{array} { l r } \text { Direct materials used } & \$ 240,000 \\\text { Direct labor } & 480,000 \\\text { Variable manufacturing overhead } & 360,000 \\\text { Fixed manufacturing overhead } & 600,000 \\\text { ling and administrative: } & \\\text { Variable } & 180,000 \\\text { Fixed } & 630,000\end{array}\end{array}$$
Required:
A. Assuming the use of variable costing, compute the cost of Webster's ending finished-goods inventory.
B. Compute the company's contribution margin. Would Webster disclose the contribution margin on a variable-costing income statement or an absorption-costing income statement?
C. Assuming the use of absorption costing, how much fixed selling and administrative cost would Webster include in the ending finished-goods inventory?
D. Compute the company's gross margin.

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Definitions:

Dividends

Payments made by a corporation to its shareholders, often as a distribution of profits.

Accounting Policies

Particular axioms, frameworks, precepts, rulings, and processes implemented by an enterprise in the arrangement and exhibition of financial narratives.

Forfeited Shares

Shares that have been surrendered or given up by the shareholder, often due to non-payment of share allotment or call money.

Refundable

Describes money that can be returned to the payer, often seen in tax credits or deposits that can be reclaimed under specific conditions.