Question

Chapter 6 Homework Help Save& Exit Submit Check my work camp cot that will be marketed throughout the United States. The following cost and revenue data relate to May, the first month of the plant's operation: 2.5 points Beginning inventory Units produced Units sold 43,000 38,000 80 Selling price per unit Selling and administrative expenses: Variable per unit Fixed (per month) $565,000 eBook Manufacturing costs: Direct materials cost per unit Direct labor cost per unit Variable manufacturing overhead cost per unit Fixed manufacturing overhead cost (per month)S 688,000 18 Print Management is anxious to assess the profitability of the new camp cot during the month of May Required: 1. Assume that the company uses absorption costing. a. Determine the unit product cost b. Prepare an income statement for May. 2. Assume that the company uses variable costing. a. Determine the unit product cost. b. Prepare a contribution format income statement for May Mc Graw Hill KPrev 17 of 18Next >

Answer 1

Construct The Absorption Costing Unit Product Cost
				Year 1
Direct Material				18
Direct labour				8
Variable Manufacturing overheads				3
Fixed Manufacturing overheads				16.00	(688000/43000)
Absorption costing unit prroduct cost				45.00
Construct the Absorption Costing Income Statement Under FIFO
				Year 1
Sales				$3,040,000
Cost of Goods sold				1710000
Gross Margin				$1,330,000
Selling and distribution expense				641,000	(38000*2+565000)
Net operating income				689,000
Compute the Variable costing Unit Product cost
				Year 1
Direct Material				18
Direct labour				8
Variable Manufacturing overheads				3
Variable costing unit prroduct cost				29
Construct The Variable Costing Income Statement under FIFO
				YEAR 1
Sales					3,040,000
Less: Variable cost
variable cost of goods sold				1,102,000
Variable selling expense				76,000	1,178,000
Contribution margin					1,862,000
Fixed expense:
Fixed Manufacturing overheads					688,000
Fixed selling expense					565,000
Net operating Income					609,000