1. Unit product cost:
Absorption costing | Variable costing | |
Direct material | $6 | $6 |
Direct labor | 10 | 10 |
Variable manufacturing overhead | 4 | 4 |
Fixed manufacturing overhead ($162,000/27,000) | 6 | 0 |
Unit product cost | $26 | $20 |
2.
Variable Costing Income Statement | ||
July | August | |
Sales | $1,058,000 | $1,426,000 |
Variable costs: | ||
Variable costs of goods sold | 460,000 (23,000*$20) | 620,000 (31,000*$20) |
Variable selling and administrative expenses | 23,000 (23,000*$1) | 31,000 (31,000*$1) |
Total variable costs | 483,000 | 651,000 |
Contribution margin | 575,000 | 775,000 |
Fixed costs: | ||
Fixed manufacturing overhead | 162,000 | 162,000 |
Fixed selling and administrative expenses | 163,000 | 163,000 |
Total fixed costs | 325,000 | 325,000 |
Net operating income | $250,000 | $450,000 |
3.
Year 1 | Year 2 | |
Net operating income as per variable costing | $250,000 | $450,000 |
Add: Fixed manufacturing overhead deferred in ending inventory (4,000*$6) | 24,000 | |
Less: Fixed manufacturing overhead released from beginning inventory | (24,000) | |
Net operating income as per absorption costing | $274,000 | $426,000 |
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable...
Denton Company manufactures and sells a single product. Cost data for the product are given Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $ 19 $ 108,000 169,000 $ 277,000 The product sells for $46 per unit. Production and sales data for July and August, the first two months of operations, follow....
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 10 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 20 Fixed costs per month: Fixed manufacturing overhead $ 108,000 Fixed selling and administrative 160,000 Total fixed cost per month $ 268,000 The product sells for $50 per unit. Production and sales data for July and August, the first...
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 3 Direct labor 10 Variable manufacturing overhead 4 Variable selling and administrative 1 Total variable cost per unit $ 18 Fixed costs per month: Fixed manufacturing overhead $ 81,000 Fixed selling and administrative 175,000 Total fixed cost per month $ 256,000 The product sells for $51 per unit. Production and sales data for July and August, the first...
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 12 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 22 Fixed costs per month: Fixed manufacturing overhead $ 135,000 Fixed selling and administrative 163,000 Total fixed cost per month $ 298,000 The product sells for $53 per unit. Production and sales data for July and August, the first...
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Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 10 Variable manufacturing overhead 3 Variable selling and administrative 2 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 54,000 Fixed selling and administrative 175,000 Total fixed cost per month $ 229,000 The product sells for $54 per unit. Production and sales data for July and August, the first...
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