Question

Required information [The following information applies to the questions displayed below.] Cool Sky reports the following costing data on its product for its first year of operations. During this first year, the company produced 44,000 units and sold 36,000 units at a price of $120 per unit. $ A 48 18 A A Manufacturing costs Direct materials per unit Direct labor per unit Variable overhead per unit Fixed overhead for the year Selling and administrative costs Variable selling and administrative cost per unit Fixed selling and administrative cost per year $ 440,000 $ 11 $ 105,000

Answer 1

2) Assume Company Using Absorption Costing Calculation of Unit cost Under Absorption Costing Direct Material Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Over head (440000/44000) Unit Product Cost Absorption Costing Unit Product Cost 82 4320000 2952000 1 Income Statement Under Absorption Costing Sales Revenue Cost of Goods Sold Cost of Goods Sold (36000*82) Cost of Goods Sold Gross Margin Selling and Administrative Expenses Variable Selling and Administrative Expenses Fixed selling and Administrative Expenses Net Operating Income 2952000 1368000 396000 105000 867000

48 2a Assuming the Firm Using the Variable Cositng Variable Costing Calculation of Unit cost Under Variable Costing Direct Material Direct Labour Variable Manufacturing Overhead Unit Product Cost Variable Costing Unit Product Cost 72 72 43200001 2592000 396000 2B Variable Costing income Statement Sales (36000*120) LESS: Variable Expense Variable Prodcution Cost (36000*70) Variable Selling and Administrative Expense(36000*11) Total Varible Expenses Total Contribution Margin Less:Fixed Expenses Fixed Overheads Costs Fixed Selling and Administrative Expenses Total fixed Expenses Net operating income (loss) 2988000 1332000 440000 105000 545000 787000