Kristin, the accountant for XYZ Industries, is studying the working papers for her client. She knows the client uses standard costing within its accounting system, but she is not sure which inventory costing method they use to prepare their reports. No variances were reported, except those as noted below, and the prior per-unit costs were the same as the current year. The working papers showed the following information: Instructions
a.Did the client use absorption costing or variable costing? How can Kristin tell?
b.How much did the client capitalize into inventory on a per-unit basis?
c.How many units did the client produce last year?
d.If the client had used the other costing method (not the one determined in part (a)), how much operating income would the client have reported for the current year?

Question

Kristin, the accountant for XYZ Industries, is studying the working papers for her client. She knows the client uses standard costing within its accounting system, but she is not sure which inventory costing method they use to prepare their reports. No variances were reported, except those as noted below, and the prior per-unit costs were the same as the current year. The working papers showed the following information:  Instructions 
a.Did the client use absorption costing or variable costing? How can Kristin tell?
b.How much did the client capitalize into inventory on a per-unit basis?
c.How many units did the client produce last year?
d.If the client had used the other costing method (not the one determined in part (a)), how much operating income would the client have reported for the current year?

Quizplus · Accepted Answer

The Answer of Kristin, the accountant for XYZ Industries, is studying the working papers for her client. She knows the client uses standard costing within its accounting system, but she is not sure which inventory costing method they use to prepare their reports. No variances were reported, except those as noted below, and the prior per-unit costs were the same as the current year. The working papers showed the following information:  Instructions 
a.Did the client use absorption costing or variable costing? How can Kristin tell?
b.How much did the client capitalize into inventory on a per-unit basis?
c.How many units did the client produce last year?
d.If the client had used the other costing method (not the one determined in part (a)), how much operating income would the client have reported for the current year?

Kristin, the Accountant for XYZ Industries, Is Studying the Working