Question

Maher Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 195 Units in beginning inventory Units produced Units sold Units in ending inventory 3,120 2,830 290 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Fixed costs: Fixed manufacturing overhead Fixed selling and administrative ta ta ta ta $102,960 $ 8,490 Required: a. What is the unit product cost for the month under variable costing? b. What is the unit product cost for the month under absorption costing? c. Prepare a contribution format income statement for the month using variable costing. d. Prepare an income statement for the month using absorption costing. e. Reconcile the variable costing and absorption costing net operating incomes for the month. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E What is the unit product cost for the month under variable costing? Cost Per Unit Variable costing << Required A Required B >

Answer 1

Part-a Compuation of Unit Product cost- Variable Costing
	$
Direct Material	$52.00
Direct labour	$59.00
Variable Manufacturing overheads	$16.00
Variable Product cost	$127.00

Part-b The Absorption Costing Unit Product Cost
	$
Variable Manufacturing cost (52+59+16)	$127.00
Fixed Manufacturing cost (102960/3120)	$33.00
Unit Product cost	$160.00

Part-c: The Variable Costing Income Statement
	$
No. of Unit Sold	2830
Sales @$195	$551,850
Less: Variable cost
variable Manaufacturing cost @$127	$359,410.00
Variable Selling & Admin cost @20	$56,600.00
Contribution margin	$135,840.00
Fixed expense:
Fixed Manufacturing cost	$102,960.00
Fixed Selling & Admin Cost	$8,490.00
Net operating Income	$24,390.00

Part-d The Absorption Costing Income Statement
	$
No. of Unit Sold	2830
Sales @$195	$551,850
Less: Cost of Goods sold @$160	$452,800
Gross Margin	$99,050
Less: Other Expense
Variable Selling & Admin cost @20	$56,600
Fixed Selling & Admin Cost	$8,490
Net operating income	$33,960

Part-e: Reconciliation Statement of Income
	$
Income under variable c osting	$24,390.00
Fixed OH in Invenry (290X 33)	$9,570.00
Income under Absorption Costing	$33,960.00