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15 January, 19:45

During the most recent year, Osterman Company had the following dа ta:Units in beginning inventory - --Units produced 11,600Units sold ($48 per unit) 9,000Variable costs per unit: Direct materials $9Direct labor $7Variable overhead $3Fixed costs: Fixed overhead per unit produced $5Fixed selling and administrative $137,500Required:1. Calculate the cost of goods sold under absorption costing. The cost of goods sold under the absorption costing method is2. Prepare an income statement using absorption costing. Refer to the list of Amount Descriptions for the exact wording of text items within your income statement.

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  1. 15 January, 22:01
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    Cost of Good Sold Statement:

    Material Cost (9*9000) = 81,000

    Labour Cost (7*9000) = 63,000

    Variable Overhead Cost (3*9000) = 27,000

    Fixed Overhead Cost (5*9000) = 45,000

    Total COGS = 216,000 dollars

    Income Statement

    Sales (9000*48) 432,000

    CoGS (216,000)

    Gross Profit 216,000

    Selling and Admin (137,500)

    Net profit 78,500 Dollars

    Note

    Absorption costing, sometimes called full absorption costing, is a managerial accounting method for capturing all costs associated with manufacturing a particular product. So selling and admin costs are not part of it.
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