Question

html operations: 26 Direct materials $320,000 $80,000 produced 40,000 units and sold 50,000 units. The selling price of the company's product is $57 per unit. the unit product cost for Year 1 and Year 2 for Year 1 and Year 2. costing: for Year 1 and Year 2. KPrex 7 of 24

Requirement 2B and 3 are the only ones I need help with

Answer 1

1	Variable costing
	Product cost
	Direct material	26	26
	Direct labor	16	16
	Variable manufacturing overhead	4	4
	Unit product cost	46	46
	Units manufactured	50000	40000
	Units sold	40,000	50,000
	Income statement
	Sales revenue	2280000	2850000
Less	Variable expense
	Variable cost of goods sold	1840000	2300000
	Variable selling and admin expense	120000	150000
	Total variable expense	1960000	2450000
	Contribution margin	320000	400000
Less	Fixed cost
	Fixed manufacturing expense	320000	320000
	Fixed Admin expense	80000	80000
	Total fixed expenses	400000	400000
	Net operating income	-80000	0
2	Absorption costing	1st year	2nd year
	Product cost
	Direct material	26	26
	Direct labor	16	16
	Variable manufacturing overhead	4	4
	Fixed manufacturing (320000/50000)	6.4	8	(320000/40000)
	Total product cost	52.4	54
	Units produced	50000	40000
	Units sold	40,000	50,000	units
	Income statement	1st year	2nd year
	Sales revenue	2280000	2850000
	cost of goods sold
	Beginning inventory	0	524000
	cost of goods manufactured	2620000	2160000
Add	Goods available for sale	2620000	2684000
	Ending inventory (52.4*10000)	524000	0
Less	Cost of goods sold	2096000	2684000
	Gross profit	184000	166000
	Selling and admin expenses
Less	Variable selling and admin expense	120000	150000
	Fixed Admin expense	80000	80000
	Total Selling and admin expenses	200000	230000
	Net operating income	-16000	-64000
	Reconciliation
	Net operating income variable costing	-80000	0
Add	Ending inventory Fixed manufacturing	64000	-64000
	Net operating income absorption costing	-16000	-64000