Denton Company manufactures and sells a single product. Cost data for the product are given:
Variable costs per unit: | ||||
Direct materials | $ | 5 | ||
Direct labor | 9 | |||
Variable manufacturing overhead | 2 | |||
Variable selling and administrative | 2 | |||
Total variable cost per unit | $ | 18 | ||
Fixed costs per month: | ||||
Fixed manufacturing overhead | $ | 72,000 | ||
Fixed selling and administrative | 166,000 | |||
Total fixed cost per month | $ | 238,000 | ||
The product sells for $53 per unit. Production and sales data for July and August, the first two months of operations, follow:
Units Produced |
Units Sold |
|
July | 24,000 | 20,000 |
August | 24,000 | 28,000 |
The company’s Accounting Department has prepared the following absorption costing income statements for July and August:
July | August | ||||
Sales | $ | 1,060,000 | $ | 1,484,000 | |
Cost of goods sold | 380,000 | 532,000 | |||
Gross margin | 680,000 | 952,000 | |||
Selling and administrative expenses | 206,000 | 222,000 | |||
Net operating income | $ | 474,000 | $ | 730,000 | |
Required:
1. Determine the unit product cost under:
a. Absorption costing.
b. Variable costing.
2. Prepare contribution format variable costing income statements for July and August.
3. Reconcile the variable costing and absorption costing net operating incomes.
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable...
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 10 Variable manufacturing overhead 3 Variable selling and administrative 1 Total variable cost per unit $ 18 Fixed costs per month: Fixed manufacturing overhead $ 96,000 Fixed selling and administrative 163,000 Total fixed cost per month $ 259,000 The product sells for $53 per unit. Production and sales data for July and August, the first...
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 6 Direct labor 9 Variable manufacturing overhead 2 Variable selling and administrative 2 Total variable cost per unit $ 19 Fixed costs per month: Fixed manufacturing overhead $ 60,000 Fixed selling and administrative 166,000 Total fixed cost per month $ 226,000 The product sells for $54 per unit. Production and sales data for July and August, the first...
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 6 Direct labor 10 Variable manufacturing overhead 3 Variable selling and administrative 1 Total variable cost per unit $ 20 Fixed costs per month: Fixed manufacturing overhead $ 45,000 Fixed selling and administrative 166,000 Total fixed cost per month $ 211,000 The product sells for $48 per unit. Production and sales data for July and August, the first...
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 10 Variable manufacturing overhead 4 Variable selling and administrative 2 Total variable cost per unit $ 20 Fixed costs per month: Fixed manufacturing overhead $ 108,000 Fixed selling and administrative 160,000 Total fixed cost per month $ 268,000 The product sells for $50 per unit. Production and sales data for July and August, the first...
Denton Company manufactures and sells a single product. Cost data for the product are given Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $ 19 $ 108,000 169,000 $ 277,000 The product sells for $46 per unit. Production and sales data for July and August, the first two months of operations, follow....
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Denton Company manufactures and sells a single product. Cost data for the product are given: $ 4 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $ 19 $ 120,000 175,000 $ 295,000 The product sells for $49 per unit. Production and sales data for July and August, the first two months of...
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