Question

answers. (30 points possible) (10 points) Penny Black Ltd, which has only one product, has provided the following data concerning its most recent month of operations: 1. Selling price $104 Units in beginning inventory Units produced Units sold Units in ending inventory 27,000 21,000 6,000 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $32 $23 S8 S5 Fixed costs Fixed manufacturing overhead Fixed selling and administrative $270,000 $150,000 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 an income statement for the month using the contribution format and the variable costing method. d. Prepare an income statement for the month using the traditional format and the absorption costing method. com/account 8682 026ab93275dc

Answer 1

Compute the Variable costing Unit Product cost
Direct Material				32
Direct labour				23
Variable Manufacturing overheads				8
Variable costing unit prroduct cost				63
Construct The Absorption Costing Unit Product Cost
Direct Material				32
Direct labour				23
Variable Manufacturing overheads				8
Fixed Manufacturing overheads				10.00	(270000/27000)
Absorption costing unit prroduct cost				73.00
Construct The Variable Costing Income Statement under FIFO
Sales					2,184,000
Less: Variable cost
variable cost of goods sold				1,323,000
Variable selling expense				105,000	1,428,000
Contribution margin					756,000
Fixed expense:
Fixed Manufacturing overheads					270,000
Fixed selling expense					150,000
Net operating Income					336,000
Construct the Absorption Costing Income Statement Under FIFO
Sales				$2,184,000
Cost of Goods sold				1533000
Gross Margin				$651,000
Selling and distribution expense				255,000
Net operating income				396,000