Question

A company reported the following information for their first quarter in business.

36,000 31,000 78 $ Beginning inventory Units produced Units sold Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month) $ 2 $ 565,000 $ 18 $ 10 $ 3 $ 576,000 Required: 1. If the company uses absorption costing: a. What is the unit product cost? b. Prepare a traditional income statement for the first quarter. 2. If the company uses variable costing: a. What is the unit product cost? b. Prepare a contribution format income statement for the first quarter.

Answer 1

Requirement (1A) Requirement (24) Direct Material Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Overhead $ $ $ $ 18.00 10.00 3.00 16.00 Direct Material Direct Labour Variable Manufacturing Overhead $ $ $ 18.00 10.00 3.00 Unit Product Cost $ 47.00 Unit Product Cost $ 31.00 Requirement (13) Absorption Costing Income Statement Quarter 1 Sales $ 2,418,000 Cost of goods sold $ 1,457,000 Gross Margin $ 961,000 Selling and Administrative Expense $ 627,000 Net Operating Income $ 334,000 Requirement (2B) Contribution Format Income Statement Quarter 1 Sales Revenue Variable Expense : Variable Cost of goods sold $ 961,000 Variable Selling and Adminstrative expense $ 62,000 $ 2,418,000 $ $ 1,023,000 1,395,000 Contribution Margin Fixed Expense : Fixed Manufacturing overhead Fixed Selling and Adminstrative expense $ 576,000 $ 565,000 Net Operating Income 1,141,000 254,000 $ Note : Please comment down for any issues