Question

EXERCISE 4A-1 Super-Variable Costing Income Statement L04-6 Zola Company manufactures and sells one product. The following information pertains to the company's first year of operations: $18 Variable cost per unit: Direct materials Fixed costs per year: Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses $200,000 $250,000 $80,000 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Zola produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume the company uses super-variable costing: b. Compute the unit product cost for the year. c. Prepare an income statement for the year.

Answer 1

1) Unit product cost : Super variable costing

Direct material	18
Unit product cost	18

2) Income statement

Sales (20000*50)		1000000
Variable cost (20000*18)		360000
Contribution margin		640000
Fixed cost
Direct labor	200000
Fixed manufacturing overhead	250000
Fixed selling and administrative expense	80000
Total fixed cost		530000
Operating income		110000