Reference no: EM132510041

OxiClear manufactures a tile and grout cleaner. The company was formed during the current year. As a result, there was no beginning inventory. Management is evaluating performance and inventory management issues, and desires to know both net income and ending inventory under generally accepted accounting principles (absorption costing) as well as variable costing methods. Relevant facts are as follows:

Selling price per gallon $ 4.40
Variable manufacturing cost per gallon 0.80
Variable SG&A costs per gallon 0.90
Fixed manufacturing costs $ 1,450,000
Fixed SG&A 235,000
Total gallons produced 650,000
Total gallons sold 620,000

Question 1: Calculate the contribution margin per unit using absorption costing:

Hint: Assume that they only purchased and sold 620,000 gallons

Question 2: Calculate the contribution margin per unit using variable costing:

Hint: Assume that they only purchased and sold 620,000 gallons

Question 3: Calculate total profit or loss using absorption costing:

Hint: Again assume that they only produced and sold 620,000 gallons:

Question 4: Calculate total profit or loss using variable costing:

Hint: Again assume that they only produced and sold 620,000 gallons: