Question

Bell Company manufactures and sells a single product. Cost data for the product follow Variable costs per unit: Direct materials Direct labor Variable factory overhead Variable selling and administrative 10.0 40 10.0 10.0 Total variable costs per unit 70.0 Fixed costs per month Fixed manufacturing overhead Fixed selling and administrative $864,000 564,000 Total fixed cost per month $ 1,428,000 The product sells for $160 per unit. Production and sales data for May and June, the first two months of operations, are as follows Units Produced 24,000 24,000 Units Sold 20,000 28,000 May June Income statements prepared by the accounting department, using absorption costing, are presented below: May June Sales Cost of goods sold $ 3,200,000 $ 4,480,000 2,688,000 1,920,000 Gross margin Selling and administrative expenses 1,280,000 764,000 1,792,000 844,000 Net operating income $ 516,000 $ 948,000

Answer 1