Question

Wiengat Antennas, Inc., produces and sells a unique type of TV antenna. The company has just opened a new plant to manufacture the antenna, and the following cost and revenue data have been provided for the first month of the plant's operation. 50,000 45,000 $76 $3 Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (total) Manufacturing costs Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (total) $ 567,000 $15 $ 900,000 Because the new antenna is unique in design, management is anxious to see how profitable it will be and has asked that an income statement be prepared for the month. Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost. (Omit the "S" sign in your response.) Unit product cost b. Prepare an income statement for the month. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "S" sign in your response.) Absorption Costing Income Statement (Chick to select) (Click to select) (Click to select) (Click to select) (Click to select)

Answer 1

1) Absorption costing:
a: The unit product cost:
DM per unit + DL per unit + Variable manuf. OH per unit + Fixed manuf. OH per unit
15 + 7 +3 + (900000/50000) = 43
b: The Income Statement:
	Amount $
Sales	3420000		45000*76
Less:Manufacturing costs:
Material	675000		45000*15
Labor cost	315000		45000*7
Variable OH	135000		45000*3
Fixed manufacturing OH	900000
Total Manufacturing Costs	2025000
Less:Fixed manuf. OH
towards Closing Stock	90000		900000*5000/50000
Cost of Goods Sold	1935000
Gross Profit	1485000
Less: Selling and Admin exp.:
Variable cost	135000		45000*3
Fixed expenses	567000
Total Selling & Admin Exp.	702000
Net Operating Income	783000
2) Variable costing:
a: The unit product cost:
DM per unit + DL per unit + Variable manuf. OH per unit + Variable selling & admin expense
15 + 7 +3 + 3 = 28
b: The Income Statement:
	Amount $
Sales	3420000		45000*76
Less:Variable costs:
Material	675000		45000*15
Labor cost	315000		45000*7
Variable OH	135000		45000*3
Variable selling & admin expense	135000		45000*3
Total Variable costs	1260000
Contribution	2160000
Less: Fixed Costs:
Manufacturing	900000
Selling & Admin	567000
Total Fixed costs	1467000
Net Operating Income	693000