38 isphase inc has provided the following financial data for 2014 units produced and 4307792

38 isphase inc has provided the following financial data for 2014 units produced and 4307792

38) Isphase Inc. has provided the following financial data for 2014:

Units produced and sold

3,500

units

Sale price

$220

per unit

Direct materials

$25

per unit

Direct labor

$45

per unit

Variable manufacturing overhead

$30

per unit

Variable selling and administrative costs

$20

per unit

Fixed manufacturing overhead

$105,000

per year

Fixed selling and administrative costs

$140,000

per year

There are no beginning inventories. Prepare an income statement for the year using the traditional format.

1) The level of inventory on hand at the end of the year does not affect the amount of operating income calculated under variable costing and absorption costing.

2) In variable costing, the value of ending finished goods inventory includes fixed manufacturing overhead.

3) When there are no units in the beginning finished goods inventory and the units produced are more than the units sold, the operating income will be higher under absorption costing than variable costing.

4) When there are no units in the beginning finished goods inventory and the units produced are more than the units sold, the operating income will be higher under variable costing than absorption costing.

5) Under variable costing, the units in the beginning finished goods inventory contain manufacturing fixed costs.

6) When all the units produced are sold, the profit calculated under absorption costing is higher when compared to the profit calculated under variable costing.

7) In variable costing, all fixed manufacturing costs are expensed in the period incurred.

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