Question

TIST TB Problem Qu. 7-273 Maher Corporation, which has only one product ... Maher Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price Units in beginning inventory Units produced Units sold Units in ending inventory 4,080 3,140 Variable costs per unit: Direct materials Direet labor Variable manufacturing overhead Variable selling and administrative expense Yixed costa: Fixed manufacturing overhead Fixed selling and administrative expense $155, 040 12,560 Required: a. What is the unit product cost for the month under variable costing? b. What is the unit product cost for the month under absorption costing? c. Prepare a contribution format income statement for the month using variable costing. d. Prepare an income statement for the month using absorption costing e Reconcile the variable costing and absorption costing net operating incomes for the month. Complete this question by entering your answers in the tabs below Requid NSA Required B Required c Required D Required E What is the unit product cost for the month under variable costing? Cost Per Unit $ 118 Variable costing Required B >

Answer 1

Maher Company Requirement a In variable costing, we do not consider the fixed manufacturing overhead. Only the variable costs are considered. Variable costing: Direct materials Direct labor Variable manufacturing overhead Unit product cost 118 Requirement b Absorption costing: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Direct labor 156 The total manufacturing overhead is 155,040 and the total units produced is 4,080. Per unit it is = 155040/4080 = 38 Requirement 599740 Variable costing income statement Sales (191 X 3,140 units) Less variable expenses: Variable cost of goods sold: Beginning inventory Add variable manufacturing costs (118 x 4,080) Goods available for sale Less ending inventory (118 x 940) Variable cost of goods sold Variable selling and administrative (19 x 3,140) Contribution margin Less fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Net operating income 481440 481440 -110920 370520 59660 430180 169560 155040 12560 167600 1960 Requirement d 599740 0 Absorption costing income statement Sales Cost of goods sold: Beginning inventory Add Cost of goods manufactured (156 x 4,080) Goods available for sale Less ending inventory (156 x 940) Gross margin Less selling and administrative expenses: Variable selling and administrative Fixed selling and administrative Net operating income 636480 636480 -146640 489840 109900 59660 12560 72220 37680 Requiremente 1960 35720 Variable costing net operating income Add fixed manufacturing overhead costs deferred in inventory under absorption costing (38 X 940) Deduct fixed manufacturing overhead costs released from inventory under absorption costing Absorption costing net operating income 37680