Question

The following cost and revenue data relate to a company's first month of operations. Beginning inventory Units produced 43,000 38,ee0 Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) $ 78 $ $565,000 $ $ 15 $ 1 $ 731,000 Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost. b. Prepare an income statement for the first month. 2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for the first month. Complete this question by entering your answers in the table below. Roa 1R Poa 20

Answer 1

la) Unit Product cost $42 ) Calculation: $ 1 Direct materials $15 Direct Labor & 9 Variable Manufacturing over head . Fixed Manufacturing over head $ 17 | Absorption costing unit product $ 42 cost Calculation of fixed Manufacturing overhead! fixed Manufacturing overhead = fixed Manufacturing Overhead Units Produced = $ 731,000 4 43.000 = $17 (lb) len Absorption costing Income statement Sales $ 2,964,ooo Less: Cost of goods sold $ 1,596,000 Gross Margin $ 1,368,000 selling and administrative expenses $ 679.000 Met operating income Calculation: Units Sold & Sales Price per Unit = 38,000 X $ 78 - $ 2,964,000 $ 689,ooo Units Sold Jales = x

lost of goods sold = Units sold & Unit Product cost = 38,000 X $42 = $1,596,000 Selling and administrative expenses = (Units sold & variable per unit) & fixed. Selling and administrative expenses =( 38,000 x $ 3) + $565,000 - $114,000 + $565,000 = $ 679,000 das Unit Product cost $25 / Calculation? $ 15 Direct Materials Direct Labor Variable Manufacturing overhead Variable costing unit Product cost $ 1

aby Variable costing Income atatement Sales $2,964,000 less: Variable expenses: Variable cost of goods sold $950,000 Variable selling expense $ 114,000 $1,064,000 $1,900,000 Contribution Margin Less: Fixed expenses. fixed Manufacturing overhead $731,000 fixed selling and administrative expenses $ 565,000 Met operating income calculation Sales = Units sold & Selling = 38,000 X $ 78 = $2,964,000 Variable cost of goods sold = Unit non $1,296,000 $ 604,000 Price per Unit e sold = Unit Cold & Variable costing Unit Product cost) - 38,00oX $25 = $950,000 Variable selling Expense = Units soldx Variable selling cont per unit = 38,000 8 $3 = $ 114,000