Question

please help

- Ivan Company, which produces only one product, has provided the following data concerning its most recent month of operations: Selling price... $104 Units in beginning inventory Units produced Units sold ........ Units in ending inventory.. 3,300 3.000 300 Variable costs per unit: Direct materials Direct labor ........ Variable manufacturing overhead.. Variable selling and administrative... $10 Fixed costs: Fixed manufacturing overhead ... Fixed selling and administrative.. $16.500 $45,000 a. Determine the unit product cost for the month under absorption costing and under variable costing. b. Prepare an income statement for the month using absorption costing. c. Prepare a contribution format income statement for the month using variable costing. d. Reconcile the variable costing and absorption costing net operating incomes for the month.

Answer 1

Part-a The Absorption Costing Unit Product Cost
	$
Direct Material	$26.00
Direct Labour	$37.00
Variable Manufacturing Overhead	$5.00
Variable Manufacturing cost (a)	$68.00
Fixed Manufacturing overhead cost (16500/3300)	$5.00
Unit Product cost	$73.00

Part-a Compuation of Unit Product cost- Variable Costing
	$
Direct Material	$26.00
Direct labour	$37.00
Variable Manufacturing overheads	$5.00
Variable Product cost	$68.00

Part-b The Absorption Costing Income Statement
	$
No. of Unit Sold	3000
Sales @$104	$312,000
Less: Cost of Goods sold @$73	$219,000
Gross Margin	$93,000
Less: Other Expense
Variable Selling & Admin cost @10	$30,000
Fixed Selling & Admin Cost	$45,000
Net operating income	$18,000

Part-c: The Variable Costing Income Statement
	$
No. of Unit Sold	3000
Sales @$104	$312,000
Less: Variable cost
variable Manaufacturing cost @68	$204,000.00
Variable Selling & Admin cost @10	$30,000.00
Contribution margin	$78,000.00
Fixed expense:
Fixed Manufacturing cost	$16,500.00
Fixed Selling & Admin Cost	$45,000.00
Net operating Income	$16,500.00

Part-d: Reconciliation Statement of Income
	$
Income under variable costing	$16,500.00
Fixed OH in Inventory (300X 5)	$1,500.00
Income under Absorption Costing	$18,000.00